The Wrong Fix for High Diesel Prices

The Price of Ignorance

When diesel prices soar past $6.50 a gallon, it's not just an economic inconvenience—it's a crisis for American farmers, truckers, and small businesses who depend on this fuel to keep their operations running. In response, some lawmakers have proposed a ban on U.S. diesel exports, arguing that doing so would bring relief to domestic consumers. But as I've seen in my years tracking energy markets, the solution isn't always what it appears to be at first glance.

"W diesel $6.57 in Iowa why doesn't Pres Trump put an embargo on diesel exports like presidents in the 70s put embargoes on ag products bc food prices were inflated. High diesel prices ARE KILLING FARMERS INCOME," Senator Chuck Grassley wrote, reflecting a sentiment shared by many in rural America.

This reaction is understandable. The price spike is real and painful, especially for those who rely on diesel to power their livelihoods. But what looks like a straightforward fix—preventing exports—could actually make matters worse.

Why Export Bans Backfire

The root of the current diesel price surge lies in global supply chain disruptions caused by geopolitical tensions, particularly the Iran war and Ukraine-Russia conflict. Russia, which typically supplies about one in nine barrels of diesel globally, has effectively removed itself from the market due to export bans imposed by Ukraine.

But here's the crucial point: U.S. refineries produce more diesel than the country consumes domestically. So while we may seem like a net exporter, the dynamics of global pricing mean that domestic consumers still pay international rates. That's because diesel trades on global markets—where supply is scarce and demand is high.

Patrick De Haan, a petroleum analyst at GasBuddy, warned me that an export ban would likely backfire by worsening the shortage. "Most lawmakers think, 'Oh, hey, this sounds easy, let's just back up products in the United States,' but that doesn't put them in the place they need to be. It's just fraught with problems that haven't been thought out," he said.

Domestic Production and Global Consequences

U.S. refineries produce approximately 5.3 million barrels of distillates (which include diesel, home heating oil, and jet fuel) per day, while domestic demand absorbs about 3.6 million barrels. That leaves a significant surplus that the market typically exports.

If we were to ban exports, refineries would likely reduce production as a response. This isn't just theoretical—it's a predictable economic behavior. "Refineries are just going to try and get around it — they have a business to run," De Haan explained. "There will be shifts that happen whether refineries start producing something that's not quite fully refined and exporting that, or they could very easily switch over to more jet fuel production."

In short, a ban would reduce domestic supply at the same time it removes export capacity—leaving American consumers with less diesel and higher prices.

Unintended Consequences for U.S. Industry

Furthermore, an export ban could severely damage long-term competitiveness of U.S. energy firms. Foreign buyers who have been relying on U.S. diesel may shift to non-American suppliers, weakening our domestic industry's global position.

Tracy Shuchart, CEO of Hilltower Resource Advisors, added, "Foreign buyers would likely cement new deals with non-U.S. diesel suppliers, potentially weakening domestic companies in the long term." This could set a dangerous precedent for U.S. trade policy and economic influence on the global stage.

What Actually Works

So what can be done to bring down diesel prices without worsening the crisis? There are several options, although none are quick fixes. One is extending the Jones Act waiver that allows foreign ships to carry cargo between U.S. ports. This waiver, set to expire November 15, could help lower costs by increasing supply efficiency.

Another option is to temporarily waive federal rules requiring refiners and retailers to sell a certain amount of renewable fuel—primarily ethanol. De Haan estimates this step could reduce fuel prices by about 10 to 20 cents per gallon.

Most importantly, though, we need to address the root cause: the global supply crunch in the Strait of Hormuz, where a fifth of world oil flows through. "Aside from that, the only thing that the administration really can do is get the Strait reopened," he said.

The Reality on the Ground

Contrary to fears, there are no actual diesel shortages in the U.S. According to data from GasBuddy, which tracks real-time fuel availability, no more than 0.5% to 1% of stations run out of diesel on any given day—sometimes due to temporary supply delays rather than true scarcity.

Some stations may delay restocking because they expect prices to drop, a rational decision in a volatile market. But overall, the system remains functional. The real issue is not supply, but pricing driven by international instability.

A Call for Strategic Thinking

The current wave of diesel export proposals is a classic example of knee-jerk policy-making in response to pain points without fully understanding the consequences. As someone who analyzes global markets and their human impact, I believe we must approach these issues with a longer view.

While it's natural for lawmakers to want to protect American consumers, a ban on diesel exports isn't just ineffective—it could be catastrophic. The solution lies in smart, strategic interventions that address the root causes of supply chain bottlenecks rather than trying to solve problems with blunt instruments.

In the end, the true cost of a diesel export ban may not be measured in dollars alone, but in lost confidence, reduced competitiveness, and the broader damage to our economic resilience. We need better policy—not more knee-jerk reactions.