Diesel export ban won't work, Energy Secretary says

NEW YORK — U.S. Energy Secretary Chris Wright on Wednesday said a U.S. ban on diesel exports would not work and could push up gasoline and jet fuel prices, a stance at ​odds with President Donald Trump, who is backing the idea.

Diesel prices have surged to record highs due to the US-Israeli war with Iran and the conflict in Ukraine, angering farmers and other users of the fuel ahead of the midterm elections in November that will decide control of Congress.

"The ‌blunt tool of banning diesel exports definitely doesn't work," Wright said at an event hosted by The Economist in New York.

Average U.S. diesel prices were $6.52 a gallon on Wednesday, up 76% from a year ago, ⁠according to motorist advocacy group AAA.

"If you can't export the diesel that ​comes out of our refineries, you run out of places to store it, ⁠and you have to reduce U.S. refining, which would put upward pressure on gasoline prices and jet fuel prices," Wright said. He also said the Trump administration is open to any ‌ideas on lowering fuel prices and will ‌make policy announcements in the coming days.

Wright said the administration was working with the refining industry to increase the supply of ⁠U.S. diesel in a "simpler, voluntary, cooperative fashion, without using blunt instruments that would reduce refining throughput." He ⁠did not detail that plan and said no decisions have been made.

"The Secretary remains fully aligned with the President in exploring all available options to lower energy prices," the Department of Energy said in a statement.

Record fuel prices are a risk for Trump as his fellow Republicans seek to maintain narrow control of both chambers of Congress in the Nov. 3 elections.

With global diesel supplies tight and few obvious ways to quickly bring prices down, the administration is facing calls from Republicans in competitive races for action, putting fuel costs at the center of a broader political challenge for the party.

The U.S. ‌oil and refining industry on Wednesday urged Trump to reject calls for a diesel export ban, saying restrictions would ​reduce refinery output and raise prices for gasoline and jet fuel.

A letter signed by 36 industry and business groups, including the American Petroleum Institute, American Fuel & Petrochemical Manufacturers, Business Roundtable and U.S. Chamber of Commerce, said U.S. refiners are running at full capacity and producing more diesel than the country consumes.

"Export bans would lead to less fuel production, tighter supplies, and rising costs for American families, farmers, and truckers," the letter states.

Run rates

While U.S. Agriculture Secretary Brooke Rollins has also raised the issue of high diesel prices with the president, other top U.S. officials have opposed an export ban. U.S. Interior Secretary Doug Burgum said last week such a ban could lead to retaliatory action from countries that export fuel to the US, which could hurt states like California.

Many energy ​analysts agree that a ban would risk boosting fuel prices.

"The loss of export abilities would force many plants to cut run rates, and reduce their output of gasoline (and numerous other products) as well, ‌which becomes counterproductive," analysts ‌for TACenergy wrote in a ⁠note on Wednesday.

U.S. refineries were running at about 94% of capacity last week, according to the Energy Information Administration.

A White House official said Trump "wants to see gas prices at the pump fall and is evaluating all the options on the table."

Wright praised Trump's policy in Venezuela, where the U.S. is urging companies to expand production and return to operations there after U.S. special forces in January captured the South American country's leader, Nicolas Maduro, and left his deputy, Delcy Rodriguez, in charge.

Many companies are interested ‌in investing in Venezuela to fix oil ​operations that have suffered over the last 20 years from neglect, corruption and U.S. sanctions, Wright ‌said.

"Some of them will strike deals, and tens ⁠of billions of dollars are flowing." ​For other companies, "it won't work, and they'll invest elsewhere."

Contributing: Liz Hampton, Timothy Gardner, Jarrett Renshaw

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