Trump weighs diesel export ban "very seriously" and concedes it could lift gasoline; Goldman puts it at 30 cents

President Trump said on Sunday that the White House is still weighing a ban on diesel exports, and acknowledged the cost analysts have been warning about. "We're thinking about it very seriously," he told a Fox News reporter, according to CNBC. "That can oftentimes lead to a little bit of an increase on gasoline for cars, so we're looking at it very seriously. We may do it."

No measure has been announced. Energy Secretary Chris Wright has said the administration is considering restrictions rather than an outright ban, and Politico reported last week on a plan for a 90-day ban, CNBC noted. Our earlier coverage: the 90-day draft and Wright's objections.

What the banks put numbers on

Goldman Sachs analysts estimated that a ban would push U.S. diesel prices down by about 25 cents a gallon a week, but only until diesel storage fills, OilPrice.com reported, citing Reuters. After that the pressure moves to gasoline, which Goldman estimated could add 30 cents a gallon a week once gasoline storage is full, because refineries make diesel, gasoline and jet fuel together. "The longer a diesel export ban lasts, the more disruptive it would likely be," the bank wrote. Once a ban is lifted, Goldman expects U.S. diesel to reconnect with prices abroad, putting upward pressure back on it.

Morgan Stanley made the same point in a note quoted by CNBC, warning of "a feedback loop to US gasoline prices as refinery runs adjust." Argus Media's Benedict George told CNBC the U.S. has supplied about half of Europe's diesel imports over the past couple of months, and that European traders mostly doubt a restriction will happen.

Where pump prices start

The latest EIA weekly survey, for Sept. 21, put the U.S. average for diesel at $6.529 a gallon, up $2.78 from a year earlier, and regular gasoline at $4.478, up $1.305. The Midwest moved fastest that week: diesel up 43 cents to $6.680 and gasoline up 29.5 cents to $4.386. AAA had diesel around $6.50 on Friday, just under its $6.53 record from Sept. 22, per CNBC. EIA's next reading is due Tuesday.

Who ends up on each side

The trade-off Trump described lands differently depending on what a business burns. These are illustrative figures, using Goldman's estimates as a single move rather than a weekly compounding one:

• A trucking or freight operator running mostly diesel gains while the ban lasts. At 2,000 gallons a month, a 25-cent drop is about $500 a month. Goldman's warning is that the saving could reverse once the ban ends.
• A landscaping or lawn-care company with gasoline pickups and mowers is on the other side. A crew burning 400 gallons of gasoline a week would pay about $120 more a week at 30 cents a gallon, roughly $520 a month.
• A farm at harvest often runs diesel combines and tractors alongside gasoline trucks, so the two effects partly offset, with the diesel relief coming first.

44,163 independent landscaping and lawn care are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 3,188 in FL, 3,052 in CA, 2,759 in TX. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

24,679 independent trucking and freight are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 2,868 in TX, 2,828 in CA, 1,916 in FL. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

For now, the practical step is to know your own gasoline-to-diesel split, since that decides which way a ban cuts. Nothing has been signed, and the analysts quoted describe any restriction as short-term, two to three months at most in George's words. More: what record diesel means for truckers, landscapers and farms, and the crude oil chart.

Sources: CNBC; OilPrice.com, citing Reuters and Goldman Sachs; U.S. Energy Information Administration; CheckThisBiz business counts. Fuel-cost examples are our illustrative calculations. This is market information, not investment advice.