High Diesel is Killing the Economy. Should We Stop Exporting It?

UPDATE: an hour after I posted this piece, I became aware that in the hotly contested Michigan Senate race, Trump flunky Mike Rogers, trailing Democrat Abdul El Sayed, has now called for an end to the Iran War, and for Diesel exports to be temporarily stopped.
As the analysis below shows, the export ban could boomerang on consumers.

When inveterate war hawk Mike Rogers suddenly declares, “The war in Iran needs to end—and end quickly,” you know he’s losing—and losing badly. https://t.co/xEY0miluzU

— Justin Amash (@justinamash) September 21, 2026

Garret Golding and Lutz Killian in Federal Reserve Bank of Dallas:

Proponents of a U.S. crude oil export ban argue that prohibiting crude oil exports would increase the supply of crude in the United States, allowing refiners to increase their production of gasoline and diesel and lowering the price of these fuels. The implicit premise is that there is enough spare capacity for this light sweet crude oil to be refined in the United States.

One important point this proposal overlooks is that the prices of gasoline and diesel in the United States are determined by their prices in global markets since the U.S. trades diesel and gasoline. Because a cessation of U.S. crude oil exports would lower the supply of oil in global markets and raise its price, one would expect global fuel prices, if anything, to increase as a result. Refiners can always sell these fuels abroad at their global price, so it makes no sense for them to sell for less in the domestic market. 

In other words, the prices of gasoline and diesel fuel in the U.S. would not be expected to decline and might actually increase, rendering the crude oil export ban not only ineffective, but also counterproductive. Thus, there is no reason to expect that U.S. consumers would benefit from such a ban.

Patrick De Haan on X:

• Refineries built their units in the Gulf specifically to serve global markets. Signaling that exports can be controlled for political convenience or to “drive prices down” discourages investment and will accelerate the refinery closures underway. Regulation is part of why refineries in California have called it quits. More closures weaken future supply security. A policy that’s sold as bringing prices down and strengthening the U.S. would quietly do the exact opposite.
• The U.S. spent years becoming the world’s backstop for diesel supply. Telling every buyer from South America to Europe that American supply is politically conditional pushes them to diversify away from U.S. refineries and U.S. supplies, softening long-term demand for U.S. product and foregoing political leverage. Just as how Canada is already now eyeing new pipelines to carry its crude oil away from Midwestern U.S. markets. This will be painful if this trend continues.
• It could reopen the debate the country settled in 2015 when President Obama and Congress lifted the 40-year ban on U.S. crude oil exports and allowed the U.S. to become an energy exporter.