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Trump speculates on diesel fuel export ban as high prices ripple across US economy
Trump speculates on diesel fuel export ban as high prices ripple across US economy. Originally published by The Conversation.
By Vidya Mani, Associate Professor, Darden School of Business; Research Associate Professor, Biocomplexity Institute, University of Virginia; Cornell University · 2026-09-23T15:20:42.047Z
Demand for rail freight shipping is up, as trucking becomes more expensive. Both use diesel fuel, but trains are more efficient at carrying heavy loads long distances. Scott Olson/Getty Images Diesel fuel powers long distance trucks, freight locomotives, boats and barges, farm machinery, construction and mining equipment, and backup generators. Its concentrated energy powers efficient engines that can haul heavy loads and refuel machines quickly https://www.coherentmarketinsights.com/industry reports/diesel engines market . Those are all excellent attributes for long periods of heavy work on the move or in locations not connected to the electricity grid. So when diesel prices hit record highs, as they have, that increases the costs of essentials like food, transportation and even other energy sources. On Sept. 14, 2026, the U.S. Energy Information Administration said national average diesel prices were US$6.52 a gallon https://www.eia.gov/petroleum/gasdiesel , which is up more than 23 cents – 3.6% – from a week earlier, and up nearly $2.78 – 74% – since the same week in 2025. The U.S. war with Iran, and to a lesser extent the Russian war with Ukraine, have disrupted oil production, refinery output and petroleum supply chains https://theconversation.com/iran war pushes diesel the economys lifeblood to record high prices with no relief on the horizon 292049 across the world, which are part of my field of study https://biocomplexity.virginia.edu/our team/vidya mani on how geopolitical friction reshapes global supply chains. These conflicts have gone on long enough now – more than six months between the U.S. and Iran https://www.reuters.com/world/middle east/six consequences six months war iran 2026 08 27/ , and more than a four years of direct battle between Russia and Ukraine https://news.un.org/en/story/2026/02/1167019 – that most companies and countries have run out of any extra supplies they might have had on hand https://www.iea.org/topics/the middle east and global energy markets . The near complete closure https://theconversation.com/why shadow tankers are the only ships still moving through the strait of hormuz 277785 of the Strait of Hormuz has dramatically reduced the flow of crude oil https://www.iea.org/reports/oil market report september 2026 across the world – a raw material necessary for producing gasoline, diesel, jet fuel and heating oil. Ukrainian attacks on Russian refineries, which have intensified through 2026 https://www.iea.org/commentaries/russian refining sector struggles amid intensifying ukrainian attacks , have restricted the flow of Russian diesel to the global market https://www.reuters.com/business/energy/russia set extend diesel export ban until end october vedomosti reports 2026 09 16/ . Put together, all this means that there’s not much diesel fuel left lying around, and lots of people want to buy what is available, as well as what little is produced each day. It’s all a matter of supply and demand. If demand remains constant and supply drops, prices rise. The effects of rising prices are broad and widespread both economically and geographically.
High diesel prices mean higher costs for trucking gas and diesel fuel to filling stations. Patrick T. Fallon/AFP via Getty Images Food and retail Farming and harvesting are seasonal operations that depend heavily on diesel powered equipment. When farmers face high fuel costs, they may restrict or postpone their planting and harvesting operations https://apnews.com/article/diesel prices record farmers harvest c320c9811a74654888255a4b4aff3d06 , which means less food is produced for sale to markets and customers. Higher diesel costs also translate into higher processing and transportation costs https://finance.yahoo.com/energy/articles/high us diesel prices put 052953417.html for food and basic staples. In particular, refrigerated trucks carrying vegetables, dairy and meat products to retail markets are heavily dependent on diesel https://time.com/article/2026/09/11/us diesel prices record high impact groceries american consumers/ . Truck freight Long haul trucks move consumer goods across the country from warehouses and distribution centers to retail stores and homes. A trucking industry research firm has estimated that a 20% increase in fuel costs can translate into a 4% increase in operating costs https://www.prnewswire.com/news releases/new atri report details accelerating costs and low profitability despite cuts 302826514.html . Trucking is not a high profit margin business https://www.wbng.com/2026/09/16/diesel prices hit record high straining new york trucking industry/ . So any increase in costs gets passed on to the consumers who buy whatever is being shipped.
Many pieces of farm equipment and machinery use diesel fuel to produce food. Jim West/UCG/Universal Images Group via Getty Images Public transit High diesel prices have a double effect on public transit. First, buses and trains powered by diesel fuel incur a direct increase in fuel costs. Second, the crude oil supply shortages have led to higher diesel and gasoline prices https://www.wsj.com/business/energy oil/americans have spent 100 billion more on fuel during the iran war 377952a1 . When gas is expensive, people shift to public transit to save money https://www.yahoo.com/news/us/articles/5 gas pushing americans cars 173038652.html , leading to increased demand for transit. Although diesel prices have spiked faster and stayed higher longer than prices for gasoline https://www.jpmorgan.com/insights/markets and economy/economy/diesel prices hit new record september 2026 what it means for inflation and investors , passengers save money by sharing the costs of transit. Air fares also more expensive, because diesel and jet fuel are produced from the same production process https://www.mckinsey.com/industries/travel/our insights/what could rising fuel costs mean for airlines . Energy systems Diesel is used for a relatively small percentage https://www.eia.gov/tools/faqs/faq.php?id=427&t=3 of U.S. power generation, but it’s substantially more common in many countries https://doi.org/10.1016/j.erss.2025.104124 , including where there aren’t widespread interconnected power grids. Anyone using diesel generators for primary or backup power has to pay more for diesel. And shortages of crude oil supplies and loss of refinery production capacity means less availability of less heating oil – which is also produced through the same process as diesel. That is expected to lead to higher energy prices for consumers in the coming winter https://www.cbsnews.com/news/heating oil bills winter iran war/ .
Refineries in California depend on Middle Eastern oil because they are not well connected to U.S. oil production areas. Kayla Bartkowski/Los Angeles Times via Getty Images Consumer prices Consumers will experience different price changes depending on their locations, which affects both the distances goods need to travel and the amounts of fuel available. For instance, the average diesel price in California has topped $8 per gallon https://finance.yahoo.com/economy/articles/california diesel tops 8 gallon 163053549.html , but the Gulf Coast https://smallfleethq.com/fuel cards/diesel/gulf coast is seeing a relatively cheaper price of $6.03 a gallon. In part, that difference is because there are many refineries and terminals along the Gulf Coast https://www.eia.gov/todayinenergy/detail.php?id=7170 , while California has very few pipeline connections https://www.eia.gov/todayinenergy/detail.php?id=65184 to other refining regions. Its refineries depend on crude oil imports from the Middle East https://www.wsj.com/business/energy oil/the iran war is hitting california harder than any other state 24bb289e . In addition, California’s efforts to curb air pollution mean it requires a more refined version of diesel fuel that emits fewer pollutants https://ww2.arb.ca.gov/our work/programs/diesel fuel . So fuel companies in California can’t just bring in diesel from elsewhere. Taxes and fuel surcharges https://theconversation.com/suspending federal gas tax wouldnt save drivers as much as they might hope heres what goes into the price of a gallon of gas 282702 also make a difference in diesel prices. The federal government imposes a flat tax on diesel of 24.4 cents a gallon https://www.eia.gov/tools/faqs/faq.php?id=10&t=10 . But state and local taxes vary. California’s state diesel tax is 48.2 cents a gallon https://cdtfa.ca.gov/taxes and fees/sales tax rates for fuels.htm , plus a 13% sales tax rate, on top of which there may be additional local taxes. In some cases, state policies to lower these taxes are thwarted. In Georgia, where state lawmakers suspended fuel taxes https://www.multistate.us/insider/2026/4/6/lawmakers push fuel tax relief amid rising gas costs from March through June 2026, many counties kept their taxes on fuel sales. A diesel export ban? In part to fuel its own military’s efforts in Ukraine, but also to help keep its domestic economy going, Russia – normally the world’s second largest diesel exporter https://universaltrades.co/blog/top 10 diesel exporting countries en/ after the U.S. – suspended diesel exports in early July 2026 https://www.spglobal.com/energy/en/news research/latest news/crude oil/072726 russia extends gasoline export ban until end of 2026 , and has extended that until at least the end of the year. The customers whose demand was formerly met by Russian diesel are now seeking other sources. Diesel producers in the U.S. are raising their prices at home, because they could make more money selling their fuel overseas https://www.reuters.com/business/energy/us fuel exports hit record march asia europe sought replace middle east supplies 2026 04 01/ . The U.S. actually produces more diesel fuel than it consumes https://www.eia.gov/energyexplained/diesel fuel/use of diesel.php . But it still imports some, because it’s not always easy to get U.S. diesel from where it’s produced to where it’s used. Sometimes, and some places, it’s easier to ship in diesel from elsewhere.
Not all gas stations have diesel fuel – the ones that do are making it known. Spencer Platt/Getty Images Some Republicans in Congress have proposed a ban on diesel exports https://thehill.com/homenews/senate/6102916 senate gop diesel export ban/ from the U.S., and President Donald Trump has said he supports one https://www.bloomberg.com/news/articles/2026 09 22/trump says he s pushed for fuel export ban amid price crunch . If that were to happen, it could help make diesel cheaper, especially near Gulf Coast refineries that normally export a lot of their diesel. It could put less upward pressure on trucking and equipment bills and consumer prices. But the benefits would depend on how long the ban lasted, what exactly it banned, how diesel was moved around the U.S. and how much of their savings oil companies, trucking companies and merchants passed on to regular Americans. There are substantial risks, too. Without export shipping to handle the volume, fuel storage near refineries may fill up. If it can’t be moved easily and economically to other states, refineries could reduce how much diesel they make – which would mean also cutting production of gasoline, jet fuel and heating oil. And overseas diesel prices would likely rise if U.S. exports disappeared, meaning regions in the U.S. that still need imports would pay even more, not less. A diesel export ban could offer short term relief to some buyers while shifting costs to others or weakening production incentives. The energy crunch from the two wars and continued attacks on production and transportation infrastructure will continue to affect the U.S. and global economy for an extended period. Alternate shipping routes, release of reserves, export bans and additional subsidies are some of the short term measures that can alleviate the worst of the pain. But until crude oil production and refinery capacity expands, people will need to live with higher prices.
Vidya Mani has received funding from LMI. She is an expert advisor at Public Spend Forum and a Senior Research Fellow with the Mexico Program and InterAmerican Dialogue.