Industry groups and businesses have urged President Donald Trump to rescind the plan to ban or limit exports of diesel, which has been pushed back against by Energy Secretary Chris Wright amid record-high diesel prices and energy shocks due to the Strait of Hormuz uncertainty, as well as the Russia-Ukraine war.
Diesel Limitations Would Be Advantageous to U.S. Adversaries
In a letter signed by more than 30 entities, including the U.S. Chamber of Commerce on Wednesday, the groups said that a robust domestic energy sector would translate to a “stronger economy, greater energy security, and less leverage for our [U.S.] adversaries.” The letter then urged Trump to not restrict the movement of diesel.
“We urge you to reject calls to ban or otherwise limit the exports of diesel and other products that have made the U.S. energy industry so strong,” adding that such a move would negatively impact America’s agriculture and transportation, as well as “lead to less fuel production, tighter supplies, and rising costs.”
The group said that with global refining capacity down 10%, U.S. refineries were “running at full capacity to supply the
U.S. and to help stabilize global fuel markets,” adding that the surplus of diesel helps meet domestic demand as well as supply to Latin America and Europe.
“If we pull back, other countries will step in, our influence will shrink, and our adversaries will gain ground,” the letter said, touting the U.S. as a “reliable” supplier of fossil fuel products.
Profits Will Suffer
The group said that it agrees with Energy Secretary Wright and Secretary of the Interior Doug Burgum that “an export ban would force reductions in refining utilization, increase prices for gasoline and jet fuel, and lead to retaliatory actions from other countries.”
Refiners in the U.S. would have to throttle production, which would lead to less gas and jet fuel production, as well as hamper profits, the group said, adding that prices in the Northeastern part of the country that imports oil would rise.
“This could not come at a worse time for consumers as home heating oil season is about to begin,” the letter said. The group added that measures like targeted Jones Act waivers, as well as collaboration with allies to bring fuel supply back to the market would help refiners in the U.S.
“The U.S. energy industry is the largest and most efficient in the world, and an indispensable economic and national security asset,” it said, adding that Trump must help “maintain this advantage” and “reject calls to ban the export of our products,” the letter concluded.
Oil, Gas Movement
Amid rising costs, data from the American Automobile Association (AAA) showed that the national average price of gasoline rose to $4.4825/gallon on Thursday. The national average price of diesel, however, declined to $6.5141/gallon. California had the highest average gas price at $6.2360/gallon on Thursday.
Oil futures were back up, with the West Texas Intermediate (WTI) crude futures contracts expiring in November rising 1.80% to $93.82 at press time. Brent futures contracts maturing in November 2026 were also on the rise, growing 2.26% to $105.41 at the time of writing this article.
Oil ETF United States Oil Fund (NYSE:USO) rose 1.30% to $150.81 during pre-market trading on Thursday. The ProShares Ultra Bloomberg Crude Oil (NYSE: UCO) ETF also recorded a 2.28% rise to $53.35 during pre-market trading on Thursday.
Iran Issues Strait of Hormuz Warning
Amid the plans to restrict diesel exports, Iran’s Security Chief Mohsen Rezaee reaffirmed that the country will not move from the proposed conditions to reopening the Strait of Hormuz, warning that failure to adhere to the conditions by the U.S. would lead to Tehran not opening the waterway.
Iran’s Foreign Ministry Spokesperson Esmaeil Baqaei, responding to the Trump administration’s claims that the war with Iran is affecting high energy costs, said that it was the U.S. that initiated the aggression in the first place following the February attack that resulted in the death of Iran’s former Supreme Leader Ayatollah Ali Khamenei.
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