WASHINGTON - The White House denied a report Wednesday that the Trump administration was preparing a 90-day ban on U.S. diesel exports, clarifying that officials are instead discussing other ways to increase domestic diesel supplies as fuel prices remain near record levels.
A White House official told Reuters that the report of a flat temporary export ban was incorrect.
The denial came after Politico reported that the administration was preparing a 90-day halt to diesel exports in an effort to increase domestic supply and reduce prices.
No executive order, regulation or other formal action imposing such a ban has been announced.
Energy Secretary rejects flat ban
Energy Secretary Chris Wright separately said Wednesday that no one in the administration is considering an outright ban on diesel exports.
Wright said a blanket prohibition could create new problems for U.S. refiners and potentially increase gasoline and jet-fuel prices.
He explained that refineries produce multiple fuels at the same time. If refiners were unable to export excess diesel, storage constraints could eventually force them to reduce overall refinery production.
Lower refinery output could then reduce supplies of gasoline and jet fuel as well as diesel.
Wright said the administration is instead discussing ways to increase the amount of diesel remaining in the United States while maintaining strong production and flows of gasoline and jet fuel.
Officials have not yet provided details about what those measures could include.
Voluntary measures under discussion
Reuters reported that Wright characterized the discussions as involving voluntary measures rather than a mandatory export prohibition.
The administration could potentially seek changes in where refiners send diesel or encourage companies to retain more supply in domestic markets, although no specific program has been announced.
The distinction is significant because a voluntary arrangement would represent a much narrower intervention than a government-imposed export ban.
Wright said some adjustments to diesel flows may be possible without disrupting the broader refinery system.
White House officials have not announced a timeline for deciding whether any such measures will be adopted.
Record diesel prices driving debate
The policy debate comes as U.S. diesel prices remain at record levels.
Reuters reported Wednesday that average diesel prices were above $6.50 per gallon as wars involving Iran and Ukraine continue to disrupt international oil and refined-fuel supplies.
Diesel is heavily used in trucking, farming, construction, rail transportation and other industries, meaning sustained high prices can affect transportation and production costs throughout the economy.
The administration has faced calls from some lawmakers and industry groups to take additional steps to increase domestic supplies.
President Donald Trump said Tuesday that he supported the idea of restricting diesel exports as officials examined possible options.
Wright's comments Wednesday clarify that the Energy Department does not support a flat export ban even as the administration considers measures intended to keep additional diesel inside the United States.
Markets reacted to the report
Diesel futures fell after the initial report of a possible 90-day export ban.
Reuters reported that October ultra-low-sulfur diesel futures were down approximately 4% as traders reacted to the possibility that more fuel could remain in the domestic market.
The White House denial introduced additional uncertainty over what, if any, export-related policy will ultimately emerge.
Energy markets can react quickly to changes in export policy because the United States is a major supplier of refined petroleum products to international markets.
A significant restriction on U.S. diesel exports could affect both domestic refinery operations and overseas fuel supplies.
Most U.S. distillate exports leave Gulf Coast
Energy Information Administration data show the United States exported an average of about 1.43 million barrels per day of distillate fuel oil in June, the latest monthly data currently available.
Approximately 1.31 million barrels per day came from the Gulf Coast, where much of the nation's refining and export infrastructure is concentrated.
That concentration helps explain Wright's concern that an abrupt export ban could cause fuel to accumulate near Gulf Coast refineries rather than automatically reaching markets elsewhere in the country.
Moving additional fuel between U.S. regions depends on pipeline capacity, shipping availability, refinery configurations and other logistical factors.
Those constraints mean changes to export policy can have different effects in different regions.
No flat ban currently planned
The administration's position Wednesday is narrower than the initial report suggested.
The White House says it is not preparing the reported 90-day blanket diesel export ban, and Wright says officials are not considering a flat prohibition.
At the same time, the administration continues to examine ways to increase domestic diesel availability.
That leaves open the possibility of voluntary agreements or other targeted measures affecting fuel flows without stopping exports entirely.
What happens next
Administration officials have not announced the specific measures under consideration or when a final decision will be made.
The next significant development will be whether the White House or Energy Department releases a formal plan addressing diesel supplies.
For now, U.S. diesel exports remain permitted, and no 90-day export ban has been announced.
The debate is instead focused on whether the government and refining industry can increase domestic diesel supplies without reducing gasoline and jet-fuel production or creating additional disruptions in international energy markets.