White House eyes diesel fuel moves that fall short of export ban

Por Ben Lefebvre and Meredith Lee Hill — POLITICO – TOP Stories

Trump administration officials are weighing alternatives to imposing a ban on diesel exports to bring prices for the fuel down from record highs — including passing the issue down to the state level, three people familiar with the negotiations said Friday.

Several options are on the table to alleviate the financial burden the high prices have inflicted on the farming and transportation sectors without a full halt to exports of the fuel, which economists and oil industry executives have warned would ultimately disrupt fuel production and push prices higher.

President Donald Trump, who has been hosting Chinese President Xi Jinping in Washington for much of the latter half of the week, is still expected to announce some sort of policy as soon as Friday or early next week, though no final decision has been made, these people said.

“The plan all week was to throw whatever spaghetti they had at the wall by today,” said one of the people familiar with the discussion who was granted anonymity to describe private discussions with the administration.

A White House spokesperson did not immediately reply to questions.

Among the evolving set of options under consideration by Trump officials are measures to boost distribution of “dyed diesel,” a red-colored fuel used in agriculture, construction and for other off-road vehicles that is exempt from state and federal taxes, three people with direct knowledge of the plan said.

The White House would also encourage more states to eliminate their state-level excise taxes on diesel ahead of the midterms, according to these people.

The internal Trump administration talks are ongoing and there’s been no final decision, but officials are working to announce a diesel plan soon, the people said, and it would likely be released by early next week.

GOP governors in Nebraska and other states have already announced a series of emergency plans to waive current taxes for off-road diesel while implementing other exemptions to try to alleviate pressure on farmers and consumers.

Earlier on Friday, GOP Alabama Gov. Kay Ivey directed state law enforcement officials to halt enforcement of the dyed-diesel rules for 120 days.

Suspending any federal-level taxes on fuel would require Congress’ action — which is very unlikely to take place before the midterms given that GOP leaders have canceled remaining votes in the House. Key GOP senators have previously dismissed calls for a federal tax holiday on gasoline, and an intense internal fight among Republicans over whether to suspend the federal gas tax died in the House before the chamber left earlier this month.

In agriculture-dependent GOP-led states, Republicans are trying to fend off a wave of Democratic gains in tight races amid anger over rising fuel costs and the compounding economic blows on farmers.

In Nebraska, where Gov. Jim Pillen announced emergency actions on Thursday, Republicans are working to salvage a marquee House race and defend a challenge to GOP Sen. Pete Ricketts by independent Dan Osborn.

But key GOP candidates are also getting hammered on the diesel crisis in blue and purple states, where the Trump administration will have to rely on Democratic governors to suspend state taxes on diesel. Former Rep. Mike Rogers, who is running for Senate in Michigan, Rep. Derrick Van Orden (R-Wis.), and other Republicans in incredibly tight races are in states with Democratic governors.

Energy Secretary Chris Wright, who has warned that an export ban would ultimately lead to higher fuel prices, has said he’s pushing for voluntary moves on diesel from refiners to provide some relief as well, though companies say that could raise antitrust concerns or spark shareholder lawsuits.

The Trump administration scramble on diesel follows a chaotic week of debate within the administration over how to relieve the economic pain from the relentless hike in diesel prices that is frustrating voters, particularly in farm states where the harvests demand large volumes of fuel. The administration had been working on plans for a 90-day ban on diesel exports before Wright pitched for alternatives after heavy lobbying from the oil industry amid strains in their long-standing alliance.

The U.S. average diesel price was $6.50 a gallon on Friday, according to AAA, up more than $2.80 from a year ago.

Diesel prices have more than doubled since the end of February, when the U.S. and Israel launched attacks against Iran that led to disruption of oil shipments out of the Strait of Hormuz and damage to refineries in the region. Ukraine has also destroyed many Russian refineries as it tries to stave off Russia’s further invasion attempts, reducing supplies of the fuel.

James Bikales contributed to this report.

Fonte: POLITICO – TOP Stories