Wright says a diesel export ban "definitely doesn't work"; exports already fell 18% to 1.33 million barrels a day

U.S. Energy Secretary Chris Wright said on Wednesday that banning diesel exports would not work. That puts him at odds with President Trump, who backed the idea a day earlier. Speaking at an event in New York, Wright said "the blunt tool of banning diesel exports definitely doesn't work," Reuters reported. His argument was that refiners who cannot export would run out of places to store the fuel and would have to cut runs, which would raise gasoline and jet fuel prices.

In place of a ban, Wright said the administration is working with the industry on a "simpler, voluntary, cooperative" effort to increase diesel supply at home. He did not say what refiners would be asked to do, and no details have been published. A White House official told Reuters that Trump "is evaluating all the options on the table." According to AAA, as cited by Reuters, the national average price of diesel was $6.52 a gallon on Wednesday, up 76% from a year earlier.

The number behind the argument

The Energy Information Administration's weekly supply report came out Wednesday morning, and its table 9 puts figures on both sides of the dispute:

Two things stand out. First, exports have already fallen without a ban. They dropped 283,000 barrels a day, or about 18%, in one week. The 1.33 million figure is the lowest weekly reading since the week of June 26, according to EIA's weekly export series. One week of data is noisy, though. The four-week average is still 1.56 million barrels a day, 21% above the same period last year.

Second, a ban would fill storage very quickly. Suppose last week's 1.33 million barrels a day of exports stayed in the country and production and demand did not change. Then about 9.3 million extra barrels would pile up every week. At the four-week export pace it would be about 10.9 million. Distillate stocks are 15.6 million barrels below where they were a year ago. At those rates, the gap would close in roughly 10 to 12 days. These are our calculations from EIA's figures. After that, inventories would keep rising past last year's level. That is the fast relief ban supporters want, and it is also the storage problem Wright described. Refiners would have to cut output, and that would reduce gasoline and jet fuel production as well.

Analysts quoted by TIME made the same point. Garrett Golding of the Dallas Fed said lower refinery run rates would mean less gasoline and jet fuel, "which means higher prices." The Atlantic Council said a ban would likely lower prices on the Gulf Coast and in the Midwest but could raise them on the West Coast. The American Petroleum Institute opposes a ban.

What traders are watching

Refiner shares fell again even after the Energy Secretary spoke against a ban. At 12:56 p.m. ET, Valero was down 3.1% at $365.52, Marathon Petroleum was down 2.5% at $380.15 and Phillips 66 was down 2.3% at $251.02, per Nasdaq. The market is not treating Wright's comments as the final word. Treasury Secretary Scott Bessent has said the administration is still studying a full or partial ban. We covered the start of the debate in our story on Trump's comments and our look at the export numbers.

Who it hits

Farms at harvest and trucking fleets would see the fastest benefit from a ban. The Midwest is where analysts expect prices to fall. A "voluntary" arrangement with no published terms gives these buyers no price they can plan around. For now, the cost is still set by the $6.52 national average.

West Coast and East Coast diesel buyers face the risk the Dallas Fed and Atlantic Council describe: a tighter world market could push prices up where local supply depends on imports or on shipments from other regions.

Chart: crude oil. More: markets.

Sources: Reuters (via WSAU); TIME; EIA Weekly Petroleum Status Report, table 9; EIA weekly distillate exports; Nasdaq quotes. Storage arithmetic is ours and assumes unchanged production and demand. This is market information, not investment advice.