Big Ag and Big Oil go head-to-head over diesel export ban

Por James Bikales and Rachel Shin — POLITICO – TOP Stories

President Donald Trump is facing growing calls from his Republican allies in farm states to restrict exports of diesel as prices soar — a move staunchly opposed by the U.S. oil and gas producers who have traditionally backed him. 

Agriculture Secretary Brooke Rollins said Trump called her Monday to discuss diesel prices, which hit a record high of $6.51 per gallon on Monday and which she called “a real concern.” Energy Secretary Chris Wright, Interior Secretary Doug Burgum and other White House officials were working on the issue through the weekend, Rollins said, adding that she expects an announcement “very soon on some potential actions.”

“I’ve certainly worked to make sure that the cause and concern of our farmers and ranchers, especially in that area right now, with the cost of diesel and fuel overall, they understand that’s a priority,” Rollins told POLITICO at a press briefing.

The growing push for an export ban comes as farmers are facing diesel prices that have been steadily rising as a result of the ongoing wars in the Middle East and Europe — driving up the price of harvesting crops and threatening to spill over into the cost of food and other goods across the U.S. economy. Republicans in farm states and beyond are desperate for the Trump administration to do something to get a handle on prices ahead of the midterm elections, even if it means crossing their traditional allies in the oil and gas sector.

Sen. Chuck Grassley (R-Iowa) posted over the weekend that high diesel prices are “KILLING FARMERS INCOME” and urged Trump to “put an embargo on diesel exports like presidents in the 70s put embargoes on ag products bc food prices were inflated.”

Rep. Ashley Hinson (R-Iowa), who is running for the Senate, called Monday morning for using “every option at our disposal to provide some relief from high prices,” including suspending diesel exports and the federal gas tax.

Joining the calls Monday was Louisiana GOP Gov. Jeff Landry, whose state is home to a massive refining and petroleum export industry.

“LET’S LOWER SOME FUEL COSTS NOW AND HELP THE ENTIRE U.S. ECONOMY with the Administration and Congress issuing a 90-day ban on U.S. diesel exports and making the small refinery exception permanent,” Landry posted on X.

The oil industry has enjoyed White House support, but the agriculture lobby tends to take precedence over most other industries, said Kevin Book, director at consulting firm ClearView Energy.

“From what I’ve seen, when ag and oil go head-to-head, America usually loves its farmers first and best,” Book said.

The White House did not immediately respond to a request for comment. Wright said last week that a diesel export ban would lead to “more expensive gasoline right away” because refineries would be forced to turn down production of all types of fuel.

“If you start putting barriers on flows, pretty quickly you will reduce the production,” Wright said at an event hosted by the Daily Caller. “You’ll have less supply. We need more supply, not less supply.”

American Petroleum Institute CEO Mike Sommers echoed those comments on X on Sunday, arguing that an export ban would “make the problem worse, not better — for consumers, farmers and the broader U.S. economy.”

“Without access to global buyers, Gulf Coast storage could fill quickly, forcing refineries to cut runs,” Sommers wrote. “And refineries don’t just make diesel — lower refinery runs could mean less gasoline and jet fuel, too.”

But the oil industry, which has long counted on the Trump White House as a policy ally, is starting to fret that the administration might concede suspending diesel exports as a way to placate Republican lawmakers facing tough reelection prospects this November.

“I am still confident that the cooler heads in the administration will prevail and we won’t see diesel export bans,” said one oil industry executive in dialogue with the White House who was granted anonymity to discuss internal discussions. “But my confidence is on less secure ground than just a few weeks ago. There is a panic in the air to address prices at the pump.”

Another oil industry executive said they believe the White House is being forced to seriously consider restrictions because of the farm lobby push, but added that administration officials understand the ways such a move could distort fuel markets.

Tom Pyle, president of the American Energy Alliance, an advocacy group for fossil fuels, said he had “no earthly idea” what Landry was thinking with his post.

“An export ban would be a disaster, especially for Louisiana,” Pyle said. “Even a novice would understand that. For starters, it would do nothing to alleviate higher diesel prices. But for Louisiana, it would be a logistical nightmare,” Pyle said.

In recent weeks, Trump and other Cabinet officials have taken to blaming Ukraine’s attacks on Russian refineries for spiking diesel prices, rather than the Iran war.

“Russia has unfortunately lost control of its Diesel Oil Industry due to its War with Ukraine,” Trump posted on Truth Social Monday morning. “A large number of their Diesel refineries have been blown up and are, at least temporarily, out of commission. This ridiculous and never ending War with Ukraine must be ended.”

Bloomberg reported on Monday that Moscow would extend its diesel export restrictions beyond the end of September, when they were set to expire.

“Diesel is almost a direct driver to higher grocery prices. So, it’s inevitable that politicians start seeking remedies. Up to this point the administration has made the geopolitical decision to continue exports. The trades will line up to have that continue and who knows where the politics end up. But it’s a geopolitical decision at the end of the day,” said a source close to the White House, granted anonymity to preserve relationships.

Diesel exports have been up this year as U.S. refiners look to replace some of the supplies on global markets lost since the Iran war crimped fuel flows through the Strait of Hormuz. The United States exported 1.6 million barrels of diesel the week of Sept. 11, according to the U.S. Energy Information Administration. That’s nearly double the roughly 850,000 barrels the year before.

Inventories of diesel rose slightly last week, but remained 13% below the U.S. five-year average.

Ben Lefebvre, Mike Soraghan and Kelsey Tamborrino contributed to this report.

Fonte: POLITICO – TOP Stories