WASHINGTON: Energy Secretary Chris Wright has told oil industry leaders to brace for possible US curbs on diesel exports amid an intensifying debate within the Trump administration over that approach.
Wright’s message was delivered to company executives in calls on Tuesday, according to people familiar with the matter, hours after President Donald Trump said he’d encouraged administration officials to consider diesel export restrictions.
Possible curbs remained under discussion on Wednesday, but no final decision has been made, with key Trump aides divided over the idea and oil executives warning the White House that any ban would ultimately lead to higher costs worldwide.
The differences among Trump’s advisers over the idea and the industry opposition demonstrate the president’s few good options to tame fuel prices before the November midterm elections that have been dominated by voters’ cost-of-living concerns.
While a diesel export ban may offer some relief, it would be short-lived and the havoc on energy markets risks counteracting any benefits, critics warn.
Wright on Wednesday instead highlighted a possible voluntary solution to that dilemma. He said the Trump administration was looking to help industry independently boost diesel supplies even in the absence of a government ban on foreign sales of the fuel.
“We are working with the industry, sort of, for a more cooperative effort to increase the supply of diesel in the United States and stop the upward price pressure,” Wright said at an Economist event.
“But that can be done in a simpler, voluntary, cooperative fashion, without using blunt instruments that would reduce refining throughput.”
Later, Wright was even more explicit, arguing a blanket ban on diesel exports was off the table.
“Nobody wants a full blanket ban or zero exports of diesel,” Wright said at a separate New York Times event.
“That’s not being discussed.
“What’s being discussed is what’s the most efficient way to get more diesel into the United States of America and continue maximum flows of petrol and jet fuel and all that.”
Wright called industry executives to alert them to the serious consideration of export curbs on Wednesday.
The conversations were described as key to encouraging possible industry support for voluntary options that could head off an outright ban, people familiar with the matter said.
A White House official, separately, disputed a Politico report that the administration was drafting a plan for a 90-day diesel export ban, calling it “fake news”.
Administration officials also reached out to some industry stakeholders to throw cold water on the report, according to people familiar with the matter.
Administration deliberations over potential diesel export curbs have intensified with surging prices for the fuel seen jeopardising Republicans’ efforts to hold onto their House and Senate majorities in the midterms.
A steady drumbeat of pleas from Republican lawmakers for some kind of a ban, including Senators Chuck Grassley of Iowa and Dan Sullivan of Alaska, also have fed the debate.
Other Republicans, including Senator Kevin Cramer of North Dakota, have said they oppose an export ban.
Retail prices for diesel that’s used widely to power freight traffic and farm equipment hit record levels this week and on Tuesday were averaging US$6.52 per US gallon nationwide, according to the American Automobile Association.
Administration discussions have been intermittent for weeks. But Trump’s acknowledgement of the possibility on Tuesday, followed by Wright’s conversations with oil executives, galvanised immediate pushback from the industry. — Bloomberg
