What a US diesel export ban could mean for you

Image source, Getty ImagesByFrancisco VelasquezBusiness reporterPublished9 minutes agoUS President Donald Trump has has said he would back a ban on diesel producers selling overseas as surging fuel prices hit drivers ahead of the midterm elections. Diesel prices are hovering near a record $6.45 per gallon on average, according to the American Automobile Association (AAA), due to the ongoing US-Israel war with Iran and tight global supplies.The proposal to stop US diesel exports aims to protect domestic consumers from those rising costs, but it could trigger major economic waves both at home and across the world, external.How much diesel does the US produce and export?The US is one of the world's leading energy producers, with domestic refineries churning out roughly four to five million barrels of diesel every day, according to the US Energy Information Administration (EIA).Americans consume about 3.6 million barrels of that daily output. Refiners export the remaining1.2 to 1.5 million barrels per day, making the US a vital supplier to the global market. Between 60% and 70% of this exported fuel goes to Latin America. Nations like Mexico, Brazil, Chile, and Ecuador depend heavily on American shipments to power their transport, farming, and factory sectors. Significant volumes also head across the Atlantic to European countries like France, the Netherlands, and the UK, as buyers search for alternatives to Middle Eastern supplies. What has happened to diesel prices in the US and abroad? US diesel prices have climbed to a record high of over $6.50 per gallon – up nearly 70% year-on-year. The spike has been driven by broader energy market shocks tied to ongoing conflict with Iran, which has restricted critical shipping routes through the Strait of Hormuz, a waterway south of Iran through which one fifth of the world's oil and gas usually flows. Diesel primarily fuels commercial vehicles in the US – such as freight trucks, farm machinery, and cargo trains – which are used for transporting goods and construction. This means higher diesel prices can drive up the price of food, building projects, and many other things.Outside the US, diesel is used in both commercial and consumer vehicles, but the effects of higher prices are similar. In the UK, diesel prices at the pump have hit an all-time high, prompting warnings about logistics costs and household budgets. UK Chancellor John Healey has told BBC News that the UK is in talks with US authorities over a potential diesel export ban and has started preparing for it.Meanwhile, in France and across continental Europe, governments are struggling with similar cost-of-living pressures because of rising fuel prices. What has Trump said, and what is his argument? Trump suggested over the weekend that restricting or outright banning US diesel exports could keep fuel in the domestic market and drive down prices for American consumers. The president said on Sunday that the administration was "thinking about it very seriously." His comments mirror remarks made on the sidelines of the United Nations General Assembly, where he stated that he had called to "not send out the diesel." Trump argues that keeping those extra barrles in the US would lower pump prices, offering immediate relief to drivers, truckers, and businesses ahead of the midterm elections. Supporters, including key Republican lawmakers like Congresswoman Ashley Hinson and Senator Dan Sullivan, view the strategy as an effective way to shield the domestic economy from foreign shocks, arguing that American energy should serve American workers first. What would an export ban mean for the US and the rest of the world? For the US economy, a ban could deliver short-term relief at the pump by flooding the domestic market with excess supply. However, energy analysts warn it could backfire. David Fyfe, chief economist at Argus Media, notes that cutting off American supply would likely cause international prices to skyrocket. That would push up global freight, food, and industrial costs, ultimately "feeding inflation back into the global economy". "At a stroke, the US's reputation as a reliable supplier of energy to the world would be shot," Fyfe added. Removing more than a million barrels of daily American supply would trigger a fierce bidding war among importing nations in Latin America and Europe. Sarah Raffoul, analytics manager at Argus Media, noted that while higher international prices would eventually curb demand, the immediate gap would severely strain trade relationships and accelerate global inflation.Related topicsFuelDonald TrumpUnited StatesUS politicsEconomicsCompaniesUS economyMore on this storyTrump says he would back ban on diesel exportsPublished5 days agoUK tries to stop Trump's diesel export banPublished1 hour ago