Political support is building around the idea of a U.S. diesel export ban, but the measure may do little to provide broad price relief and could instead worsen regional imbalances in the fuel market, according to FreightWaves energy reporter John Kingston.
In his view, such a restriction would almost certainly lead refiners to cut processing runs, reducing overall supplies not only of diesel but also gasoline, jet fuel and heating oil.
The debate has intensified as diesel futures swung through a 25-cent range in a single trading session. Kingston partly linked that move to President Trump's remarks at the United Nations about potentially “annihilating” Iran, the world’s fourth or fifth largest oil producer. He said comments of that kind are naturally interpreted by the market as price-supportive.
The U.S. has not banned exports of any commodity since lifting its crude oil export ban in 2015 after the shale boom. But with diesel, Kingston argued, the core issue is the country’s uneven regional supply structure.
New England, for example, has no nearby refineries and relies heavily on imports from Europe. If U.S. exports were blocked, European supply would tighten, making those imports more expensive or harder to secure. At the same time, the Colonial Pipeline, which moves products from the Gulf Coast to New York Harbor, is likely already operating at full capacity and would be unable to absorb much more volume.
Kingston said that under such conditions some markets could be flooded with fuel while others would remain short of supply. The West Coast faces a similar challenge because Gulf Coast diesel cannot be moved there easily without a long and costly transit through the Panama Canal. He added that tanker rates are currently “off the charts,” limiting rerouting options even with a Jones Act waiver in place.
An export ban would also remove a key incentive for refiners to keep output high. Refiners are now running at maximum capacity because diesel and gasoline margins are especially profitable. If access to export markets is restricted, they would likely reduce runs, cutting fuel supply across the system. Kingston also noted that seasonal refinery maintenance is already expected to lower output.
The wider sense of uncertainty was also highlighted by JP Morgan’s commodity research team, which said publicly last week that it sees no resolution to elevated energy prices. The bank’s analysts had previously pointed to $100 Brent crude, a 5-handle on the 10-year Treasury yield and $4 gasoline as thresholds that could trigger a policy shift, but none of those levels proved decisive.
Kingston also touched on trucking regulation, noting that the federal government has issued a nationwide hours-of-service waiver for fuel haulers for the first time since the COVID-era waiver. He also pointed to the ongoing Lujan case involving commercial driver's licenses and upcoming appearances at the Trimble Users Meeting in San Diego and an NMFTA cybersecurity conference in Long Beach, where the role of artificial intelligence in freight system security is expected to be a major topic.
