Critics Warn Trump-Backed Diesel Export Ban Could Further Drive US Economy Into the Ground

In an effort to blunt price hikes from his war with Iran, President Donald Trump is reportedly preparing a 90-day ban on diesel exports from the United States.

The cost of diesel—which is used to power semitrucks, trains, construction and farm equipment, and other large machines—has soared since Trump launched the war at the end of February, prompting Iran to restrict oil shipments through the critical Strait of Hormuz.

As of Wednesday, according to the American Automobile Association, average US diesel prices have jumped to $6.52 per gallon, a 77% increase from last year. Over the past month, as Trump has ramped up hostilities with Iran, prices have risen by 91 cents a gallon, a 16.2% increase.

Heightened diesel prices increase the cost of everything else—including food, transportation, and other energy sources. And while Trump claimed earlier this month to be bringing prices "way down, way, way down,” the latest federal data show consumer prices rising 0.4% in August—four times July’s monthly increase—and 3.4% over the past year.

With the midterms less than two months away and many voters blaming Trump for the strain on their pocketbooks, several GOP members of Congress, including some facing tough Senate races, such as Sen. Dan Sullivan (Alaska) and Rep. Ashley Hinson (Iowa), have cheered the idea.

During a press conference on Tuesday, Trump told reporters: "I’ve said let’s not send out the diesel. We make a lot of diesel. It could have a little bit of an effect on regular automobile gasoline because when you do that, you know, it’s a sort of a flow. It’s a balance. But no, I’ve called for it. I’ve called for it within my people. I’ve been talking about it.”

But while the plan may help to keep diesel prices down for long enough to help Republicans stop the bleeding before November, some economists are warning that it could make things much worse in the long term.

“The US Gulf Coast would get a temporary pump price dip, at the cost of likely higher coastal prices [elsewhere] and eventually, higher prices for everyone as investment gets scared away," explained Bob McNally, president of Rapidan Energy Group and a former White House energy adviser under the administration of former President George W. Bush.

"You would get a short-term, abrupt collapse in pump prices” in some regions, McNally said, but “the US would shatter its reputation as a safe place to invest for a generation.”

Energy economist Philip Verleger said that a ban, even if temporary, "would have the same long-term effect as President [Richard] Nixon’s soybean embargo: the world would no longer view the United States as a dependable source.”

Speaking to Reuters, Verleger warned that in an already undersupplied market, removing US barrels could potentially double global prices.

But the short term seems to be all Trump and those around him pushing the ban are considering. An oil industry executive who discussed the proposed ban with White House officials told Politico that Trump viewed any fallout as “a December problem.”

He said that "cooler heads" in the White House have been "overpowered" by the "political camp" that has a "sky-is-falling, we-have-to-do-something concern about prices at the pump."

Lorne Stockman, research director at Oil Change International, argued that there was a much simpler solution: ending the war that has caused oil prices to spike in the first place.

"The proposed diesel export ban is a short-sighted 'America First' response to a global crisis his reckless war helped create," Stockman said. "The US exports about 5% of global diesel, and a ban risks turning a severe shortage into a global economic disaster."

"It could send international prices soaring, drive up the cost of food, fertilizer, and essential goods, deepen hunger, and push already-struggling economies toward recession," he continued. "At the same time, it would likely do nothing for people in the US, as refineries would cut production and gasoline prices would rise even further."

He said, "Congress should use its constitutional powers to stop Trump’s war, tax the oil industry’s soaring windfall profits, and support farmers and other hard-hit sectors, and accelerate renewable energy and electrification, not hoard fuel and force the rest of the world to pay the price.”