Editors at National Review Online critique the latest bad energy idea circulating in the nation’s capital.
Not long ago, Republicans were battling Democrats to repeal a decades-long prohibition on U.S. crude oil exports. Now in a political fix and in need of a quick one, President Trump and GOP lawmakers are pushing to ban diesel exports as pump prices shoot to record highs. The policy has cheap appeal ahead of the midterms, but it would wreak havoc on energy markets at home and abroad.
Global prices have spiked since fuel supplies were strangled this year by wars in the Middle East and Ukraine. Higher crude oil costs are primarily to blame, but diesel prices have risen even faster than gasoline because conflicts are hitting shipments of the former fuel especially hard.
American refiners produce more than enough diesel, currently exporting more than a quarter of their output to other countries. Proponents of an export ban theorize that, by closing off international sales, consumers would no longer have to bid against foreign buyers to fill up. Trapping surplus supply in the United States could further suppress costs, as refiners would have to cut prices to clear their inventories.
Lawmakers up for election, especially those from farm-heavy states, want to see prices drop before November — and they would rather halt refiners’ exports than ease costly biofuel blending mandates. Tinging the proposal is thoughtless nationalism. Remember when Republicans were boasting that America had become a net energy exporter?
If an export ban were implemented, diesel prices could indeed be held down, but only for some people and only for a short time. The United States does not have a perfectly unified diesel market; rather, it is limited by the physical constraints of pipelines already running at full capacity. Most excess diesel would be stuck near major refining hubs like the Gulf Coast, forcing prices down in some regions far more than others.
