A Diesel Export Ban Won’t Solve Our Fuel Crisis

Politicians on both sides of the aisle claim there’s a quick fix to stratospheric diesel prices: an export ban. It seems intuitive that if diesel can’t leave the country, there’s more available for domestic consumption and prices here will fall. Unfortunately, the oil market is not that simple, and a ban would do more harm than good. 

The U.S. isn’t short on diesel but is a major global exporter, producing 5.3 million barrels of distillates a day, only about 3.5 million of which are sold domestically. Today’s high prices reflect a global shortage caused by domestic refinery closures and foreign conflicts. In addition to shortages from the Iran war, Ukrainian strikes on Russian refineries have knocked out a large portion of global diesel production. 

Removing American production from the global market would have little positive impact at home but would risk shortages abroad, hamper global supply chains, and drive up prices paid by Americans for countless imported products. It would also endanger the imported oil supplies on which the U.S. depends. 

Much of the crude oil pumped in America isn’t refined here but is exported and refined elsewhere. Meanwhile, the U.S. import millions of barrels per day because most American refineries are optimized to handle types of crude oil that are different from what’s primarily pumped domestically. 

In short, we import oil, refine it, and then sell the products—including diesel—back to foreigners. But if we refuse to sell them the very product of the crude oil they sold us, they lose the primary incentive to sell us their crude in the first place. If other nations stopped exporting crude to America, domestic refineries would run short on oil and diesel supplies would plummet. 

Geography is also a major problem. Most of America’s refining capacity is concentrated on the Gulf Coast, far from major urban markets in the Northeast and West Coast. Recent refinery disruptions in the Midwest have also increased the need to move fuel there, but an export ban doesn’t conjure the infrastructure to facilitate this. 

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At best, diesel prices would drop temporarily along the Gulf with little impact elsewhere because of logistical hurdles. Those obstacles were precisely why the Trump administration has granted waivers this year to the Jones Act, a law that restricts domestic waterborne shipping between American ports, making it unnecessarily expensive to transport fuel from Gulf Coast refineries to consumers in the Northeast and West Coast markets. 

Even with those waivers, the U.S. markets for petroleum and petroleum products remain globally interconnected and complex. That also means an export ban on diesel is unfeasible because of how easy it would be to bypass. 

Refineries can stop short of producing diesel, leaving it mixed with small quantities of other liquid distillates like gasoline, and sell that cocktail for export, leaving the last steps of the refining process to be done overseas. 

Then there’s heating oil, which is essentially identical to diesel fuel. What stops a refinery from exporting virtually the same product but under a different name? The only way to prevent the export ban from being bypassed is to make it so broad that it captures many other refined products as well, exacerbating the problem. 

Additionally, refiners that are currently optimized to produce as much diesel as possible can switch to other products like jet fuel and send that overseas while foreign refineries do the opposite and ramp up diesel production. That’d reduce the amount of diesel available here at home, minimizing any positive impact on prices.  

But there’s a limit as refineries cannot produce unlimited quantities of one petroleum product independently of every other. Domestic refineries have been running at or near capacity for most of this year and even if they switch to produce as little diesel as possible per barrel of oil, production will still exceed domestic demand, which means they’ll need to refine less oil as diesel stockpiles balloon. 

That, in turn, will cause other petroleum products like gasoline to run short, pushing up prices. 

An export ban would also weaken the incentives necessary to expand supply. Refiners invest to increase capacity when they can sell their products to willing buyers. Blocking foreign markets would chill that investment and introduce new political risk. Who knows when such a ban will end? America’s previous ban on oil exports lasted 40 years. 

That was when Washington tried to manage energy scarcity in the 1970s with price controls, allocation rules, and export restrictions—all of which failed to create more energy. Instead, it distorted incentives, contributed to shortages, and prevented American producers from expanding supply. After those restrictions were lifted, U.S. energy production boomed. 

America became an energy leader and the world’s diesel backstop through investment, innovation, and improving access to markets. Export controls delayed that ascent and reimposing them signals that the government may block market opportunities whenever prices become politically inconvenient. That’s a path to energy dependence, not dominance. 

The fastest and most reliable way to bring down domestic fuel prices is a cessation of hostilities in the Middle East and Eastern Europe. Beyond that, policymakers should remove barriers that prevent producers, refiners, and fuel distributors from responding to high prices. 

That means accelerating permits for oil and gas development, making federal leasing predictable, allowing new pipelines and refining infrastructure to move forward, and eliminating regulations that divert investment away from reliable and affordable fuels. 

Temporary and immediate relief could also be provided by federal and state lawmakers cutting waste, fraud, abuse, and corruption from their respective budgets and using the savings to offset a suspension of gasoline and diesel taxes. Unlike an export ban, tax relief would lower the price paid by consumers without negatively impacting supply chains. 

America spent years becoming the world’s go-to for diesel, but an export ban signals that we’re no longer reliable. Instead of another government restriction, the answer is more freedom to produce, refine, transport, and sell American energy.