Diesel’s price surge isn’t primarily an export problem. It’s a scarcity problem.
U.S. refineries recently ran near 97% utilization, while distillate inventories were about 13% below their five-year seasonal average. And when diesel averaged $5.60 in May, EIA estimated the price came from:
42% crude oil
25% refining
23% distribution & marketing
11% taxes
So an export ban attacks the wrong part of the equation. It can redirect existing gallons temporarily, but it doesn’t produce another barrel of oil, expand refining capacity, or build pipelines and storage.
Worse, restricting market access raises the policy risk surrounding the long-term investments needed to increase supply.
Want cheaper diesel? Improve the fundamentals.
More production. More refining. Lower barriers to investment. Fewer tariffs on productive inputs. Freer transportation and trade.
High prices are telling us supply is scarce. Let’s respond by creating more of it, not by creating another government restriction.
More on this in my newsletter tomorrow.