Diesel hit $6.53 a gallon last week, which is an objectively catastrophic number, and the Trump administration's big idea to fix it might just blow up gas prices instead. Goldman Sachs, JPMorgan, and basically every energy analyst with a pulse are lining up to explain, as politely as finance people can manage, that this plan doesn't work the way the White House thinks it does. And yet, here we are.
The Plan That Sounds Good Until You Think About It
President Trump told reporters Sunday that his administration is "very seriously" considering a ban on U.S. diesel exports, according to CBS News. The logic is simple enough on its face: American refiners produce more diesel than Americans actually use, exporting roughly 1.5 million barrels a day according to S&P Global Energy. Stop the exports, flood the domestic market with supply, prices drop. Easy.
Except it isn't. Not even close. The problem is that diesel doesn't get refined in a vacuum. It comes out of the same crude oil runs as gasoline and jet fuel. You can't just tell a refinery to keep making one thing and stop making the others. That's not how refineries work. That's not how any of this works.
Goldman Sachs Has Some Notes
Goldman Sachs ran the numbers, and the short version is: a diesel export ban would help briefly, then hurt badly. According to the bank's analysts, a ban could shave about 25 cents off diesel prices while refiners still have room in their storage tanks. That window closes fast.
Once storage reaches capacity, Goldman estimates gas prices could jump by 30 cents per gallon for every additional week the ban stays in place. "The longer a diesel export ban lasts, the more disruptive it would likely be," Goldman analysts wrote, explaining that downward pressure on diesel production means downward pressure on gasoline production, which means upward pressure on gas prices for consumers. So the medicine treats the symptom for about a month, then causes a different, arguably worse disease.
JPMorgan and Wood Mackenzie Also Want a Word
In a September 24th report, JPMorgan analysts walked through what happens when storage fills up and refiners can't keep running at full capacity. "Refiners can't indefinitely produce excess supply. And since a refinery can't simply stop making diesel while continuing to produce the same amount of gasoline, crude runs eventually would have to fall," they wrote. Translation: the brief price relief reverses, and you've also now messed with gasoline supply. According to JPMorgan, cracks in refining economics would appear after just 30 days.
Wood Mackenzie's Alan Gelder was even more direct. "The irony of a U.S. diesel export ban is that it would likely increase costs for American consumers," he said in a statement. "Cutting crude runs to manage the oversupply would shift the cost burden from diesel to gasoline, meaning a policy designed to bring relief at the diesel pump could end up driving prices higher at the gasoline pump." Three separate Wall Street institutions, same basic conclusion. The policy is self-defeating.
The Industry Is Already Screaming
The American Fuel and Petrochemical Manufacturers, the trade group that represents the actual companies the administration wants to squeeze here, put out a warning Friday before Trump even made his Sunday comments. CBS News reports the group said blocking refiners from exporting excess diesel would cause them "to cut fuel production overall, including gasoline, putting upward pressure on prices and increasing America's reliance on imported fuel."
So to recap the bidding: the refiners don't want it, the banks think it backfires after 30 days, and independent energy consultants are using words like "irony" to describe a diesel relief policy that raises gas prices. A White House official told CBS News no policy decisions have been made yet, and that Trump is "evaluating all available options." Which is the polite way of saying the White House is still shopping around for an option that won't blow up in their faces.
Why Diesel Got Here in the First Place
Diesel at $6.53 a gallon on September 22nd, per AAA data, is not a normal number. Diesel is the fuel that moves freight. It runs the trucks that stock shelves, the tractors that harvest crops, the construction equipment that builds things. When diesel prices spike, the cost of everything that gets moved, grown, or built goes up too. The pressure on the administration to do something is real and completely understandable.
Republican lawmakers have been pushing the export ban idea loudest, according to CBS News, which tells you something about how this particular strategy got elevated to "very seriously considering" at the presidential level. The politics of being seen to act are good. The economics of this particular action are, according to the people whose entire job is to understand the economics, quite bad.
The Dingo Take
You are supposed to believe that an administration willing to blow up global trade relationships, alienate every allied nation, and blow a hole in the federal budget over tariffs has suddenly gotten squeamish about unintended consequences. They haven't. What's actually happening is the classic move: identify a problem that's hurting people, grab the lever that looks most like a solution, and yank it hard before anyone can explain why the lever is connected to a different machine than you think.
Goldman Sachs, JPMorgan, and Wood Mackenzie are not left-wing think tanks. They are not anti-Trump activists. They are the institutions the Republican Party has spent 50 years telling voters to trust on economic matters. When all three of them agree that a policy will hurt the consumers it's supposed to help, that is not a fringe position. That is the financial establishment waving its arms at a speeding car.
Diesel at $6.45 a gallon is a genuine crisis and it deserves a serious response. What it doesn't deserve is a response that burns through its benefits in under a month and then punishes everyone who drives a gasoline car as a consolation prize. If the administration implements this ban anyway, remember who told them not to, and remember that they didn't care.
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