Krit Chanwong, Travis Fisher, and Michael Abi-Nader
The average price of diesel fuel in the US shot up from about $3.69 earlier this year to a high of $6.53 per gallon on Wednesday, September 23. Beyond the sticker shock at the pump, higher-priced diesel means the cost of transporting just about anything by heavy-duty truck, rail, or marine transport will rise, deepening the affordability crunch affecting American households.
Politico reported that the Trump administration was planning to ban diesel exports for 90 days, while a White House official denounced the report as false. Although we understand the urge to address diesel prices, banning exports will do little to reduce prices in the short run and could backfire spectacularly in the long run. We support the view expressed by Secretary of Energy Chris Wright, who told a New York audience on Wednesday that banning diesel exports is a blunt tool that won’t work.
Wright went on to say, “If you can’t export the diesel that comes out of our refineries, you run outof places to store it, and you have to reduce US refining, which would put upward pressure on gasoline prices and jet fuel prices.” In addition to these near-term concerns, oil producers would have less incentive to continue exploring and producing crude oil if the valuable commodities that can be refined from oil—including diesel—were confined to the domestic market.
Diesel Price Reductions Likely Rebound
A diesel export ban has never been enacted, so it’s unclear what the effects might be. But if we want to make predictions, we have some historical precedents to rely on. In 1973, the Organization of Petroleum Exporting Countries (OPEC) stopped all fuel exports to the United States. This caused fuel prices to spike. In hopes of reducing foreign crude oil dependence, Congress passed the Energy Policy and Conservation Act, which prohibited the export of crude oil.
For decades, the crude oil export ban had little practical effect because US refineries could buy and process most domestic crude while importing large quantities to meet the rest of their needs. As shale production surged during the fracking revolution, producers increasingly had more light crude than domestic refineries could readily absorb. The ban then limited their ability to sell that oil abroad. By 2014, crude oil producers were complaining of the economic effects of this export ban, and Congress finally repealed it the following year.
The repeal was not without its detractors. Daniel J. Weiss, a senior fellow at the Center for American Progress, claimed in 2014 that “lifting the nationwide crude oil export ban could similarly raise gasoline prices.” Other organizations raised similar arguments, and 13 Democratic senators also claimed that repealing the ban would allow “US oil to be sold overseas at higher prices,” which “could increase prices here.”
The opponents of repeal were wrong. In a 2020 report, the Government Accountability Office (GAO) found that repealing the ban did not significantly increase retail fuel prices. This was almost entirely because the price of fuels was set on the international market. As such, the repeal of the export ban mostly reduced refiners’ profit margins, as they had to buy American crude oil at higher prices.
Fuel prices are set on the international market, as there are ample opportunities for producers to receive the best price. If US fuel prices fell below the global average price, US exporters could sell internationally. This would eventually pull up US prices to match international prices. If US fuel prices exceeded the global average, importers would import more international fuels, lowering American fuel prices. This intuition is called fuel price parity.
Take the example of the crude oil ban from 1975 to 2016. Figure 1 plots the monthly prices of West Texas Intermediate (WTI) and Brent crude oil from May 1987. Throughout this period, WTI and Brent crude oil prices were highly similar, with a correlation coefficient of 0.99. And even during the period when the ban began to take effect (from 2011 to 2015), the correlation coefficient remained very high at 0.96. So, crude oil prices broadly tracked global prices regardless of whether there was a binding ban.
Given fuel price parity, a diesel export ban is likely to offer US consumers only a brief reduction in diesel prices. Assuming diesel and crude oil markets arbitrage in a similar manner, studies show that US prices close 59% of its deviation from world prices within a month. So, within a month or so after the ban, US diesel prices are going to converge again with world diesel prices through reductions in diesel output. This reduction in output will undoubtedly affect jobs and economic activity in Gulf Coast states such as Louisiana, Texas, and Alabama.
Logistical Headaches
Even with an export ban, it is unclear whether excess diesel could reach the areas most affected by price increases. This is because the logistics of US fuel distribution do not allow easy access to the most affected places.
As Table 1 shows, the states most affected by increases in diesel prices are primarily located on the West Coast, the Rocky Mountains, and in the Midwest. An export ban, however, would primarily trap diesel in the Gulf Coast area of the United States. The only way to move this excess diesel to the heavily affected areas is by pipeline or by ship.
Currently, there are no pipelines that connect the Gulf Coast to the West Coast. There is also no major pipeline that connects the Gulf Coast to the Rocky Mountain area. However, a pipeline connects Midwestern states to the Gulf. This pipeline is, however, highly utilized. As of June 2026, the Midwest received 595,000 barrels per day of fuel products from the Gulf Coast. This pipeline has a capacity of 720,000 barrels per day. So, at most, 125,000 barrels of extra diesel could be sent from the Gulf Coast to the Midwest. In June 2026, the Gulf Coast exported 1.3 million barrels of diesel per day. This means that less than 10 percent of the diesel trapped by an export ban on the Gulf Coast could be sent to the Midwestern states through pipelines.
The other main option is shipping, but that must contend with the Jones Act. The federal cabotage law restricts domestic water transport to vessels that are US-registered, US-owned, and built in US shipyards. Fewer than 60 tankers comply with these requirements, accounting for less than 1 percent of all such vessels worldwide.
The Trump administration issued a Jones Act waiver in March for energy and fertilizer shipments, better connecting refineries to US consumers. But its renewal in August introduced new complications. Whereas operators previously notified authorities only after a voyage was underway, each proposed voyage must now be approved on a case-by-case basis. And if the waiver expires in mid-November as scheduled, logistical headaches will mount.
Free-Market Solutions
If the federal government wants to reduce the price of diesel, it has a set of reforms available that would allow more diesel to be produced and brought to consumers. First, the Environmental Protection Agency (EPA) could revisit the Renewable Fuel Standard. Refiners must obtain and purchase credits, known as Renewable Identification Numbers (RINs), to satisfy renewable fuel mandates. The EPA’s 2026 and 2027 rule set the highest requirements in the program’s history. Relaxing these mandates in regulations (or repealing them via new legislation) would reduce refiners’ compliance costs.
Permanent repeal of the Jones Act would put the country in a much better position to move fuel to domestic markets. The Jones Act has created structural barriers that a waiver cannot quickly overcome. Firms plan items such as tanker deployment and access to terminals well in advance, and they have limited reason to reorganize those arrangements around a waiver that may soon expire.
Finally, Congress should make it easier to build and expand pipelines for refined fuels. The Gulf Coast produces more diesel than it uses, while the East Coast has relatively little refining capacity. In March 2022, the East Coast received 900,000 barrels of distillate per day from the Gulf Coast by pipeline, tanker, and barge. One of the main routes, the Colonial Pipeline, often operates at or near capacity, leaving suppliers with little room to increase deliveries. The long-term answer is for Congress to pass a strong permitting reform package and make it easier to build energy infrastructure.
Conclusion
President Trump should follow the same logic behind his day-one repeal of the LNG export pause. In Executive Order 14154, Unleashing American Energy, the President recognized that fuel trade was a way to “solidify the United States as a global energy leader long into the future.” A 90-day export ban might lower prices at first, but it would also shrink the market for oil producers and Gulf Coast refiners. Congress and the administration should embrace free markets and let producers export America’s energy resources.