Folks, I almost spilled my coffee reading this one. It seems some Republicans want President Trump to stop exporting diesel to friends and allies because prices are getting out of hand. I mean, who can blame them? Diesel is now over $6.50 a gallon, which is just crazy. But, bless their hearts, they think banning exports will fix the problem. I’m not so sure about that.
Rep. Tim Burchett, a Tennessee Republican, even went to the House floor with a billboard that said diesel prices are “out of control.” And Louisiana Gov. Jeff Landry wants a 90-day ban on US diesel exports. Now, I get it, prices are high, but is banning exports really the answer? I’m not convinced.
Researchers say that an export ban would likely only provide a temporary reprieve from sky-high diesel prices and would backfire in the medium and long run. It would raise prices on friends and allies, jack up gasoline prices, crush US refiners, and damage America’s reputation as a reliable energy superpower. You can’t make this stuff up, folks.
Bob McNally, a former energy official in the George W. Bush administration, said that an export ban would be an “authentic policy error” and that it would be the “king of the APEs” (I have no idea what that means, but it sounds serious). He also said that diesel prices could plunge by dimes per gallon in the Gulf Coast and the Midwest, but the East Coast and West Coast would experience sudden price hikes because they rely on imports.
The price of diesel has surged 83% so far this year, which is the biggest annual increase since AAA started tracking diesel prices in 2000. And it’s not just the US that’s affected – global diesel prices could skyrocket if the US bans exports. Somewhere in Atlanta, a producer thought this sounded terrifying, and now we have a big story about how the coasts are going to get screwed if the US bans diesel exports.
Garrett Golding, assistant vice president at the Federal Reserve Bank of Dallas, said that surging global prices for diesel “will boomerang back” onto the East Coast and, to a lesser extent, the West Coast. So, basically, there’s no guarantee that a US export ban would even cause the national price of diesel to drop. And if Washington suddenly prevented refiners from selling to customers overseas, they would logically pull back on how much crude they process into fuel, which would likely mean higher prices and less supply of all fuels.
The oil industry is already responding to the push to ban US diesel exports. Mike Sommers, CEO of the American Petroleum Institute, warned that an export ban would “make the problem worse, not better – for consumers, farmers and the broader US economy.” Refiners have been booming this year because of record-setting margins to turn oil into diesel, but an export ban could put intense pressure on the industry by causing refiners to dial back production. Some refiners may not even survive, which would be the opposite of what the White House says Trump wants.
In conclusion, the story of diesel exports is a complex one, folks. While I understand the desire to do something about high prices, banning exports might not be the answer. It’s a high-stakes game of chicken with Iran, and the best way to drive down energy prices at home might be to end the Iran war, not limiting exports. As Gregory Brew, senior analyst at Eurasia Group, said, “Unless they are prepared to make a deal with Iran, they don’t have good options for lowering prices.” So, let’s just sit back, sip our coffee, and see how this all plays out – hopefully without any more coffee spills!
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
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