Thune Says He's Open to a Diesel Export Ban as Price Hits Record $6.27 a Gallon

Diesel hit a record national average of $6.27 a gallon Tuesday, September 15, according to AAA, up roughly 80 cents in a month and nearly $2.60 above the $3.69 average from a year ago. Senate Majority Leader John Thune told reporters at the Capitol he is "open to exploring" a ban on diesel exports.

"We'll be looking at any proposal that is a viable solution, but I do think if we have the supply in this country and we're exporting it right now, that might be one way of getting at it," Thune said, according to Bloomberg Government's Steven T. Dennis and confirmed by ZeroHedge and Colorado Politics. "If that would take pressure off of prices, you know I'm open to exploring it."

Thune drew a contrast with an alternative floated by Texas Democratic Senate candidate James Talarico: suspending the federal diesel tax. Thune called that a "short-term" fix that would "create holes" in the Highway Trust Fund. He said an export ban "probably" makes more sense to him, though he added the ideal fix would be reopening the Strait of Hormuz, according to Colorado Politics.

Burgum pushes back

Thune's own party isn't unified on this. Interior Secretary Doug Burgum told reporters at a G20 energy meeting in Houston on Monday, September 14, that an export ban "would be unlikely to lower consumer prices" and warned that other countries could retaliate, potentially hurting U.S. regions that depend on imported energy, including California, according to Colorado Politics and AgBull. A White House spokesperson declined to say whether the administration is considering a ban, pointing reporters back to Burgum's comments, according to Morningstar's Claudia Assis.

The U.S. is the world's largest diesel exporter. Cutting off roughly 1.7 million barrels a day of distillate exports (the four-week average through September 4, per EIA data cited by ZeroHedge) would slam global markets that are already short on Russian supply. Europe alone imported about 7 million barrels of U.S. diesel in June, up to 15% of its total imports, according to EADaily and Zamin.uz.

A ban might lower Gulf Coast wholesale prices at home while making things worse for allies and inviting trade retaliation, exactly what Burgum argued. Farm groups have told reporters some of their members are pushing for a ban anyway, according to AgBull, since diesel runs the trucks, trains and combines that move the fall harvest.

Why supply is this tight

U.S. distillate inventories sit 13% below their five-year average, and gasoline inventories are 5% below average, according to EIA data cited by Morningstar. The Strategic Petroleum Reserve has dropped to 96.4 million barrels as of September 4, according to EADaily and Zamin.uz. Refiners are running close to their ceiling, with AgBull putting utilization near 98% and EADaily and Zamin.uz citing a lower figure near 95%.

Russia, the world's No. 2 diesel exporter, has banned its own exports through the end of September and is widely expected to extend that, according to Morningstar. Ukrainian strikes on Russian refineries have compounded the shortfall. President Trump said Monday that Russia and Ukraine had agreed to stop targeting energy infrastructure, but AgBull reported the two sides continued energy-related attacks on Tuesday regardless.

Brent crude touched roughly $108 a barrel and WTI topped $105, according to Colorado Politics, levels tied partly to the still-unresolved conflict with Iran.

What Washington is actually weighing

Rather than a ban, the White House has been discussing using the Defense Production Act to expand domestic refining capacity, an idea that came up during a meeting between Trump and refinery executives, according to Reuters reporting cited by AgBull. No final decision has emerged. White House spokeswoman Taylor Rogers confirmed officials are evaluating regulatory changes, faster permitting, and additional investment, but with refineries already near capacity, that path takes time. Bloomberg Intelligence's Mike McGlone warned time isn't guaranteed. McGlone compared diesel's surge past $6 to gasoline's 2008 run, which he said helped fuel the Great Recession.

Separately, Jarrod Agen of the administration's National Energy Dominance Council told CNBC the public would soon hear about "energy deals" meant to bring prices down, according to Morningstar, without specifying what those deals involve.

No export ban has been announced, no DPA order has been signed, and the White House has not endorsed Thune's idea. The question is whether Trump acts on refining capacity, an export ban, or neither before diesel prices become a bigger midterm liability with the November elections roughly seven weeks away.