By Nicole Jao
NEW YORK, Sept 23 (Reuters) – US Energy Secretary Chris Wright on Wednesday said a US ban on diesel exports would not work and could push up gasoline and jet fuel prices, putting him at odds with President Donald Trump, who is backing the idea.
Diesel prices have surged to record highs due to the US-Israeli war with Iran and the conflict in Ukraine, angering farmers and other users of the fuel ahead of the midterm elections in November that will decide control of Congress.
“The blunt tool of banning diesel exports definitely doesn’t work,” Wright said at an event in New York.
Average US diesel prices were $6.52 a gallon on Wednesday, up 76% from a year ago, according to AAA, a motorist advocacy group.
“If you can’t export the diesel that comes out of our refineries, you run out of places to store it, and you have to reduce US refining, which would put upward pressure on gasoline prices and jet fuel prices,” he added.
Wright’s comments stand out because public disagreement with Trump from a cabinet member is relatively uncommon in an administration in which senior officials have generally aligned themselves closely with the president’s positions.
Record fuel prices are a risk for Trump as his fellow Republicans seek to maintain narrow control of both chambers of Congress in the November 3 elections. With global diesel supplies tight and few obvious ways to quickly bring prices down, the administration is facing calls from Republicans in competitive races for action, putting fuel costs at the center of a broader political challenge for the party.
While US Agriculture Secretary Brooke Rollins has also raised the issue of high diesel prices with the president, other top US officials have opposed an export ban. US Interior Secretary Doug Burgum said such a ban could lead to retaliatory action from countries that export fuel to the US, which could hurt states like California.
Many energy analysts agree that a ban would risk boosting fuel prices, as a resulting domestic glut would force a slowdown at refineries.
“The loss of export abilities would force many plants to cut run rates, and reduce their output of gasoline (and numerous other products) as well, which becomes counterproductive,” analysts for TACenergy wrote in a note on Wednesday.
A White House official said Trump “wants to see gas prices at the pump fall and is evaluating all the options on the table.”
Wright praised Trump’s policy in Venezuela where the US is urging companies to expand production and return to operations there after US special forces in January captured the South American country’s leader, Nicolas Maduro, and left his deputy Delcy Rodriguez in charge. “A number of companies have already gone into Venezuela, but a larger U.S. presence in a country for sure is a little bit of increased security,” Wright said.
(Reporting by Nicole Jao in New York; Additional reporting by Liz Hampton, Timothy Gardner, and Jarrett Renshaw; Editing by Nathan Crooks and Paul Simao)
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