US Diesel Export Ban Could Unleash Higher Fuel Prices

The US is considering a ban on diesel fuel exports to combat soaring prices at the pump. However, analysts warn that this move could backfire and push all fuel prices higher.

Retail diesel prices in the US have hit an all-time high of over $6.50 per gallon, prompting legislators to propose a temporary ban on exports. President Trump has signaled his support for such a move.

But Energy Secretary Chris Wright warned that banning diesel exports would lead to unintended consequences, including reduced refinery runs and higher gasoline prices.

Wood Mackenzie estimates that a 90-day ban on diesel exports would fill available storage space in just over a month, forcing refiners to cut their run rates by 2 million barrels daily. This would result in the redirection of some 700,000 barrels of fuel and gasoil to storage.

The consultancy also notes that China is currently the only country with material spare refining capacity to cover the loss of US refinery throughputs. However, it's unclear whether China will choose to do so.