Trump Signs On To A Diesel Export Ban Even Though It Could Make Things Worse
I'm LongbridgeAI, I can summarize articles.President Trump supports a diesel export ban to lower domestic fuel costs for farmers and truckers, despite expert warnings that the measure would be short-term, uneven, and potentially increase gasoline and jet fuel prices. While some Republicans endorse the idea for political relief in key states, industry experts argue it fails to address global market tightness, may cause refineries to cut production, and could alienate oil industry allies.
WASHINGTON — President Donald Trump on Tuesday said he likes the idea of banning the export of diesel fuel to lower the price for farmers and truckers — even though experts believe the desired benefit would be short-term, uneven and possibly lead to increased costs for gasoline and jet fuel.
"I've called for it within my people; I've been talking about it," Trump told reporters at a photo opportunity at the United Nations.
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He then referred the question to Treasury Secretary Scott Bessent, who acknowledged that the administration is studying the idea to determine "whether it's feasible in terms of the overall refining capacity and whether a full or partial ban would work."
Doing something, anything, and quickly to help farmers in states with potentially key congressional races in November has become a rallying cry for Republicans, even though Iowa state Rep. Josh Turek, the Democratic candidate for Senate in the state, was the first high-profile politician to propose a diesel export ban when he rolled out a plan to lower energy prices last week.
Farmers, typically a strong GOP constituency, are rebelling over the high cost of diesel, which now costs roughly $6.50 a gallon, almost two dollars a gallon more than it did a year ago. The fuel's high cost, directly related to Trump's war on Iran, has lifted Democratic hopes in red states like Kansas, Iowa, Ohio and Nebraska.
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But an export ban would face major roadblocks, even if the administration could implement it. Industry experts say it would do relatively little to lower prices. It would also alienate traditional GOP allies in the oil industry, and multiple Republican senators said they would oppose such a ban.
Nevertheless, Chuck Grassley, Iowa's senior Republican senator, endorsed the idea over the weekend. Rep. Ashley Hinson, Turek's GOP opponent in the Senate race, joined the bandwagon on Monday, as did Mike Rogers, the Republican in a tight Senate race in Michigan.
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"The war in Iran needs to end to bring costs down — but Michigan families can't afford to wait," Rogers wrote Monday on social media. "Here's what we can do now: place a temporary embargo on diesel exports. American energy should provide relief to American families first."
Whether such drastic government intervention would have the desired effect is another matter.
Dan Eberhart, a Republican donor who owns an oil services company and who lobbied for years to end the country's crude oil export ban, said any reduction in retail diesel prices would be modest, geographically limited to areas closest to refineries, and temporary.
Places like the Gulf Coast, New Jersey and California, home to many of the nation's oil refineries, would see the most price reductions, he said, as they would see the quickest glut of diesel that could no longer be exported. Price reductions would be even less in other parts of the country.
What's more, refiners who were suddenly seeing their profit margins drop are likely to take the opportunity to shut down for long-deferred maintenance or switch their input formulas to favor more profitable products, like gasoline or bunker fuel. "The refiners are going to switch and produce less diesel," he said. "In the 90-day range, the benefit would be eroding."
Matt Randolph, another oil industry executive with more than three decades of experience in the business, agreed that an export ban would not bring the relief that elected Republican officials in the hardest-hit states are demanding.
"I think a lot of refineries just shut down for maintenance for a period of time since they haven't had the chance to do that," he said. "It's a stupid idea."
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Randolph said the fundamental piece that export-ban proponents are missing is the global nature of the problem. "We don't have a shortage, we just have a tight market. Banning exports doesn't add any diesel to the global market," he said.
What's more, refineries shutting down would have unintended consequences, as would trading partners suddenly dealing with higher diesel costs.
"If refineries cut back production because of a ban, which they likely would, it could potentially even make gasoline prices rise a little, but also jet fuel and heating oil," Randolph said. "The more important point is that we would be cutting off Allies that rely on us and we buy goods from, like Mexico. So it would result in a simple transfer of cost, if we save a little on diesel we just pay more for stuff from Mexico, because diesel in Mexico will skyrocket if we cut them off."
Other Republicans on Capitol Hill also did not seem thrilled with the idea.
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"I don't know how they actually could execute it, and I think they got to know what any long-term ramifications would be," Sen. Mike Rounds of South Dakota told HuffPost.
Sen. Ted Cruz, of oil-rich Texas, said it would be a "mistake" and that forcing refiners to reduce production could "backfire badly."
Mississippi Sen. Roger Wicker said he wasn't ready to support the idea, while Nebraska Sen. Deb Fischer said it wasn't a long-term solution.
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