Will Trump Make the Ultimate Blunder to Ban Diesel Exports?

We often talk about the disconnect between Washington and reality when it comes to the energy sector. 

After all, many political careers live or die by the sword of energy prices. 

When times are good, we’ll see Presidents take credit for cheap oil prices and surging production. But when times are bad it ends up costing someone an election. 

You also know as well as I do that, more often than not, those politicians have little or nothing to do with the situation. 

This goes for both sides of the aisle, too. 

President Obama was able to take credit for record domestic production growth after the shale boom kicked off in 2008, although his policies certainly didn’t make things easy for them. 

But hey, all’s fair in love and war around the D.C. beltway. 

Sometimes, however, the policy decisions that are handed down have an incredibly powerful impact on energy prices. Unfortunately, most of the time things are for the worse. 

And still, they never learn their lesson. 

My older readers can remember back in 1975 when Congress had a bit of a problem. 

After being subjected to an oil embargo the year prior, in which we saw crude prices surge by 300%, our politicians made the terrible decision to ban crude oil exports out of the United States. 

The goal was noble enough. They wanted to conserve domestic oil supply and protect everyone from the kind of skyrocketing fuel prices that plagued us in 1973 and 1974. 

Banning exports was a simple level that politicians could reach for to keep U.S. oil inside the U.S. 

It didn’t work. 

Even though the ban did little to bring prices down, it likely did real damage to domestic production in the years that followed. 

What it DID DO was let members of Congress go home and tell voters that they did something about the problem. 

That success was an illusion and failed to insulate us from the second oil shock that shook the world in 1979 when the Shah was overthrown in Iran. 

Now it’s 51 years later, and Washington is reaching for the same lever again. 

This time it’s to protect a different fuel, yet comes from the same instinct. 

Recently, diesel prices smashed through an all-time high, hitting north of $6.50 a gallon nationally (and over $8 in California). 

As you might expect, farmers and truckers alike are furious. 

So after seeing calls to simply stop exporting the fuel, all we can do is shake our heads and hope someone listens to reality. 

Roughly 55% of America’s refining capacity sits along the Gulf Coast. That’s where most of our diesel gets made.

And the pipelines that carry it out to the rest of the country? They’re already running close to full.

So let’s walk through what actually happens if Washington pulls the trigger.

Look, the diesel that can’t be allowed to leave the country won’t magically appear in New Jersey or California. The pipes and ships that would carry it there are already maxed out — there’s no spare capacity sitting around waiting to be used.

In spite of the (very) short-term relief that would be seen, the situation will soon turn disastrous.

Yes, we’ll see prices fall for a bit, until our refiners adjust accordingly. 

Remember, we export roughly 1.3 million barrels per day of diesel. And make no mistake, it’s THAT supply that’s keeping other countries afloat during this oil crisis. 

Take away that buffer supply, and global diesel prices will explode higher on tighter supply. 

Meanwhile, we’ll see refiners along the Gulf Coast start cutting their refinery runs in response to the export ban (why produce it if they can’t sell it?). 

Now think of the secondary effect from this action…

You don’t take a barrel of oil, then snap your fingers and turn it into a barrel of diesel. You’re getting a host of other products from that barrel of crude, such as gasoline and jet fuel. 

When they start cutting runs (and you can bet they will!), we’ll see tighter supply in those other product markets. 

That’s a recipe for higher prices across the board. 

Shame on any of President Trump’s advisors who don’t say this outloud, including the Energy Secretary, who should know better. To his credit, he has been on record saying an export ban won’t work. 

Are we looking at just simply more lip service regarding an export ban to calm a volatile market? Well, one can only hope. 

I know diesel prices sitting at $6.50 a gallon is a real problem, and an obvious fix is to stop selling overseas. 

But obvious and correct aren’t necessarily the same thing, and we learned that the hard way back in 1975. 

That leaves us with the refiners. 

If there’s been one standout winner that we’ve called from this messy war with Iran, it’s been the downstream players in the U.S. oil and gas industry. 

It’s the one corner of the energy sector that has been quietly booming all year. 

Valero, Marathon Petroleum, Phillips 66… all of these stocks have ripped higher in 2026, some more than doubling as the diesel crack spread. The margin refiners that turn crude into fuel blew past $100 a barrel. 

Yes, in case you’re wondering, that’s also a new record. In fact, it’s a bigger spread than anything we saw during the 2022 energy crisis.

The reason is simple: Global refining capacity is offline, diesel is scarce, and American refiners are getting paid handsomely to fill the gap, both at home and abroad.

That trade has worked because the market has been allowed to work.

How many times have we said to always look at the supply/demand fundamentals? Tight supply, high prices, and the freedom to sell into whichever market pays the most.

Any future bans on diesel exports would be like taking a chainsaw to any meaningful slice of the demand that’s been driving those record margins. 

The underlying supply squeeze is real, and it isn’t going away because Washington floats a bad idea for an easy, short-term fix. 

Cross your fingers that this talk of a diesel export ban is just that — talk. 

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