The Trump administration is preparing a 90-day ban on US diesel exports in an effort to bring down soaring energy prices ahead of the midterm elections, Politico reported on Wednesday, citing five people familiar with the discussions. President Donald Trump is inclined to announce the restriction by the end of the week, even as the proposal faces opposition inside the administration and from the oil industry.US ultra low-sulfur diesel futures fell more than 5 per cent after the report. The October futures contract was trading at $4.7199 a gallon, down 4.5 per cent.The proposed ban comes as diesel prices have surged amid disruptions linked to the Trump administration’s war against Iran, which began in February, and Ukrainian attacks on Russian oil refineries. Farm-state Republicans have been pressing the administration to act as fuel costs rise.The average US diesel price reached $6.52 a gallon on Wednesday, according to AAA. That was 91 cents higher than a month earlier and $2.83 higher than a year ago.
Trump weighs ban despite opposition
The legal process for imposing a 90-day restriction is still being worked out, according to people familiar with the discussions. If implemented, it would be the first restriction on US energy exports since the Obama administration lifted the country’s decades-old ban on crude oil exports in 2015.Some Republican lawmakers, refining industry executives and administration officials have argued against a complete ban. They have warned that any short-term fall in diesel prices could eventually be followed by higher prices for diesel, petrol, jet fuel and other fuels.A temporary export halt could initially increase domestic diesel supplies. Fuel shipments originally bound for Europe or Asia could instead be directed into the US market, potentially pushing prices down in some regions.But refiners could later respond by cutting production because of the loss of a major export market. That could reduce domestic supplies and push prices higher, according to people familiar with the discussions.
Officials divided over proposal
US energy secretary Chris Wright, treasury secretary Scott Bessent and interior secretary Doug Burgum have protested against a total ban, people familiar with the internal discussions said.Wright also spoke to energy company executives on Tuesday night and told them that a 90-day ban was likely to be announced in the coming days, according to a Trump energy adviser. Several executives then contacted the White House to oppose the proposal.The adviser said there was still uncertainty over whether the plan would go ahead, warning that “there’s a lot of swirl so it might change.”“It’s a terrible idea,” the adviser said.Another industry official said the final decision could depend on the “last person in the room” with Trump before he makes a decision.Wright later spoke against the proposal at an event in New York on Wednesday.
White House rejects report
The White House and energy department did not immediately address specific questions about the reported plan.A White House official rejected the Politico report, saying: “This is another fake news news story from Politico.”An external adviser to the administration said there had been “a bunch of frantic outreach” in recent days to find alternatives to an export ban.The adviser said there were concerns that the administration could repeatedly extend a temporary ban, creating a precedent for greater government intervention in energy markets.“It’s clear that there is a lot of internal opposition to it,” the person said.
Political pressure grows
The reported proposal comes less than seven weeks before the US midterm elections, with Republican candidates facing pressure over high energy costs.One oil industry executive who has discussed the proposal with senior White House officials said Trump was inclined to announce the ban by the end of the week and view any negative consequences as “a December problem”.Another person familiar with the White House discussions said the pressure to act on fuel prices had overtaken concerns about the potential consequences.“What has overpowered cooler heads [in the White House] is the absolutely, sky-is-falling, we-have-to-do-something concern about prices at the pump” faction, the person said. “That camp has been swept aside by the political camp, which says, ‘dammit, something has to happen.’”