According to Lipow Oil Associates President Andy Lipow, banning U.S. diesel exports would lower diesel prices but raise the price of almost all other fuels.
“It’s a really, really bad idea,” Lipow told Yahoo Finance (video above).
President Trump said Sunday that he was “thinking very seriously” about a ban, although he seemed less than convinced as his team weighed options lower than one.
The problem starts with Gulf Coast refiners, who “would have to figure out what to do with a million and a half barrels per day of diesel fuel that would no longer be exported,” Lipow said. “So your choice is either to store it or not to.”
Storages would fill up within weeks, he said, and refiners said they “should reduce crude rates.”
“Not only would they produce less diesel,” Lipow continued, “they would also produce less gasoline, jet fuel, lubricating oils, asphalt, etc.”
Learn more: Trump-backed diesel export ban could have ‘unintended consequences,’ experts warn
“That’s why it’s a bad idea,” Lipow said, “because if diesel prices would go down, prices for other fuel categories would go up.”
The damage would extend overseas and affect “basically everyone,” he said, from Mexico, “one of the largest importers of U.S. diesel fuel, over 200,000 barrels per day,” to South America and Europe.
“If diesel prices skyrocket all over the world, what I would worry about is driving these other economies into a recession,” Lipow said, “ultimately dragging the United States down with it.”
In-house AI tools helped us analyze the transcripts. Humans wrote and edited this message.
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