Price At The Pump: Diesel Export Ban Could Push Fuel Prices Up

The up and down movement in oil prices continues, thanks to Sunday’s announcement by President Trump that he’s rejecting Iran's offer to reopen the Strait of Hormuz, in exchange for ending or pausing the U.S. blockade on Iran's ports.

"And as a result, oil prices are starting the week climbing a bit again after falling for the latter part of the week last week on hope that there would be talks on the sidelines of the UN General Assembly meeting," said Gasbuddy.com's Patrick DeHaan. "Oil prices are back going up this morning after that rejection.”

In early Tuesday morning’s trade West Texas and Brent Crude were both trading flat at $94 and $104 per barrel, respectively.

DeHaan noted another issue the farming community has been following very closely, is the Administration discussing a diesel export ban. He said, if such a ban were to be implemented, refineries would likely try to reduce the amount of diesel they're producing because, since they could only sell it in the U.S.

“So refineries could make the switch over to producing more jet fuel. Alternatively, what could also happen is that refineries simply slow down operations. They've been running extraordinarily high rates above 97% for the bulk of the summer. If refineries essentially can't sell or export that leftover diesel that's produced, they'll probably start producing less of it. And due to the nature of refining, you can't produce less of something that comes out of a barrel of oil without reducing how much oil you're putting into the refinery. So, the worry is that a diesel export ban could cause refineries to simply process less oil, which would also then negatively impact gasoline supplies and jet fuel, sending both prices of those commodities higher as a result."

DeHaan added President Trump acknowledged over the weekend that if a ban is implemented, it could push U.S. gasoline prices higher. For more from DeHaan, listen to our entire Price at the Pump podcast:

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