The USA will elect a new House of Representatives in a few weeks. Polls currently indicate a clear defeat for President Trump and the Republicans. One reason: the tank rage. An export ban on diesel is intended to bring record prices down. It could be a shot in the oven.
The EU Commission warns Donald Trump. So do the US oil industry and American fuel associations. The same goes for your own energy minister. But the US President is not deterred by such objections. Last weekend, on the sidelines of a golf tournament, Trump confirmed what many feared in a conversation with a Fox News reporter: He was "seriously considering" introducing an export ban on US diesel.
The goal is clear: the population is angry about ever-increasing gasoline and diesel prices. According to the American automobile club AAA, a gallon of diesel (3.8 liters) currently costs just under $6.44. That's the equivalent of 5.68 euros and is another new record. About a year ago the gallon cost just under $3.71.
The problem for Trump is that in a few weeks Americans will have the opportunity to express their frustration with tanking. At the beginning of November, they will elect a new House of Representatives and, in some cases, a new Senate in the midterm elections. Polls currently indicate a clear defeat for the Republicans in the House of Representatives.
Several Republican MPs from agricultural states are therefore urging Trump to urgently intervene and appease more conservative workers in “blue-collar jobs”, i.e. relieve the financial burden. Farmers need large amounts of diesel for the autumn harvest. Diesel powers tractors, combine harvesters and forage harvesters, but also freight trains, trucks and delivery vans.
Donald Trump blames Ukraine for high diesel prices. He's not wrong: The Ukrainian attacks on Russian refineries have not only caused a fuel crisis in Russia itself. In the past, the huge empire has also provided large quantities of diesel for the global market. In order to ease the critical situation at domestic gas pumps, Moscow imposed a ban on the export of diesel in the summer.
"Increasing disruptions in Russian refineries as a result of an increase in Ukrainian drone attacks are likely to have a greater impact on the diesel supply situation," says oil analyst Sarah Raffoul from price reporting agency Argus Media, summarizing the situation. Energy market data provider Kpler agrees: The biggest problem in the global energy system is no longer crude oil supply, says an analysis, but refinery capacity.
But the US President is anything but innocent about the skyrocketing fuel prices. In addition to Russia, Saudi Arabia, Kuwait and the United Arab Emirates are also among the ten largest diesel exporters. At least until the Iran war: According to the International Energy Agency IEA, the Gulf states exported around 390,000 barrels of diesel and gas oil per day in August. That was only a quarter of the amount that was shipped from the Persian Gulf to the world before the war.
In many cases, as with liquid gas in the USA, affected countries have found replacements. The United States exported 1.6 million barrels of diesel per day abroad in August. In February, before the war began, it was one million barrels.
If Trump withdraws US supplies from the global market before the midterm elections, the result would be devastating. Europe produces 70 percent of the diesel it consumes itself, but the lost US supplies would still have to be replaced.
In August, the U.S. accounted for about half of Europe's diesel exports, according to price reporting agency Argus Media. If a US export ban were imposed, Europe would have to compete with the Asia-Pacific region and Africa for additional supplies from India and the Middle East.
"An export ban could drive up world market prices by up to 100 percent," warns energy economist Philip Verleger in a report by the Reuters news agency.
But the export ban could also be a boomerang for Trump and the United States. It seems counterintuitive, but it could force US refineries to cut their own diesel production and thus drive up American diesel prices further instead of lowering them. Hence the warnings from the American fuel associations.
The problem is that most refineries are located on the US Gulf Coast. This is where the large export infrastructure for deliveries abroad is located. From there, the diesel is also distributed via pipelines within the United States. However, not every major U.S. market is connected to the national pipeline network. The US East Coast, for example, also sources some of its diesel from global markets, i.e. from abroad. It would be directly affected by the American export ban.
In the medium term, however, the connected US markets would also suffer. The loss of export markets would force refineries to temporarily store diesel. However, the capacities of the fuel tanks are limited. As soon as these are full, the refineries would have to reduce their production. There would be less diesel available for sale. Prices would rise - and many fuels, because refineries not only produce diesel, but also use crude oil to produce heating oil, kerosene, regular or premium gasoline.
Analysts agree: The diesel export ban would mean less diesel and less gasoline would be available on the US market. Fuel costs for most Americans would rise significantly, says global consulting agency Wood Mackenzie. The reaction on the financial markets to the possible export ban was telling: refinery stocks collapsed.
However, it remains unclear whether there will actually be a ban. It is clear that, in addition to the EU, American oil bosses are also hoping for a different solution. They are urging the White House to suspend the federal diesel tax. That would lower prices at gas stations and not even put a strain on the oil companies' wallets: a tax cut would come at the expense of the US budget.
But even if Trump were open to this proposal, he would need the support of the House of Representatives. But the Republican representatives there are currently campaigning - some with the diesel export ban.
