A ban on US diesel exports would cut diesel and gasoil production by about 800,000 barrels a day and push US East Coast gasoline prices up by roughly 15%, or about 26 cents a gallon, according to Wood Mackenzie analysis — raising the specter of record gasoline prices from a policy designed to deliver relief at the diesel pump.

The warning lands as the White House debates emergency measures against record-high diesel prices. President Donald Trump told a press briefing on Tuesday he had called for a ban. "I've said, let's not send out the diesel," he said.

Louisiana Governor Jeff Landry has already declared a state of emergency over diesel supplies, allowing farmers and loggers to use lower-taxed "dyed diesel" in on-road vehicles for one month. That even Louisiana — a heartland of the US oil and gas industry — has moved to cushion fuel costs signals the severity of the crisis.

Senator Chuck Grassley of Iowa backs an export ban, arguing it would help farmers. But opposition is widespread, and some of it comes from inside the administration. Energy Secretary Chris Wright told an event in New York this week: "The blunt tool of banning diesel exports definitely doesn't work."

One news outlet reported a 90-day export ban was under consideration at the White House; the story was quickly denied. No formal announcement of any export restrictions had been made at the time of writing. Secretary Wright was reportedly asking refining industry leaders to introduce "voluntary" curbs, and Bloomberg reported Trump's advisers were still analysing the potential impact of a ban.

Industry groups including the American Petroleum Institute and American Fuel and Petrochemical Manufacturers have warned a ban would be a costly mistake that could worsen the situation. Oil executives have reportedly been calling the president to talk him out of export restrictions. Grassley said he hoped the White House would ignore the oil companies' warnings; a group representing oil and gas workers replied that if that logic held, the US should ban beef exports too.

Why the modelling says it backfires

US diesel and gasoil exports ran at about 1 million barrels a day over the summer. Refineries have some flexibility to reduce diesel yields, but a ban would leave substantial excess production heading into storage. Once tanks fill, refiners would have to cut crude runs.

The impact would concentrate on the Gulf Coast, which holds the bulk of US crude distillation capacity and virtually all deepwater export infrastructure. If exports were cut off, Gulf Coast barrels would have nowhere to go.

Wood Mackenzie's Refinery Supply Model suggests gasoline production would drop about 70,000 b/d alongside the 800,000 b/d fall in diesel and gasoil. The result: East Coast gasoline prices about 15% above base case, near record highs.

"The irony of a US diesel export ban is that it would likely increase costs for American consumers," says Alan Gelder, Wood Mackenzie's SVP for Refining, Chemicals and Oil Markets. "A policy designed to bring relief at the diesel pump could end up driving prices higher at the gasoline pump."

US diesel prices would fall in most of the country as refiners pushed more product into the domestic market. But international prices would rise sharply. Diesel in North-West Europe would run about 27% above base case — roughly 80 cents per gallon higher.

That prospect has alarmed governments worldwide. President Emmanuel Macron urged Trump not to impose a ban, arguing it would be bad for the world and the US economy.

The US would also import the damage. The East Coast imported about 120,000 b/d of diesel last year, so higher international prices would put upward pressure on the North-East, the region most reliant on imports. Second-round effects would follow: dearer fuel in Europe and Mexico would raise the price of goods those economies sell into the US, adding to inflationary pressure on American consumers.

Other countries have gone down this road. Russia banned diesel exports in July after Ukrainian drone attacks on its refineries. China curbed oil product exports in March and still operates a quota system despite easing the restrictions.

"Voluntary" measures more likely

One idea in circulation would have refiners "voluntarily" earmark a share of production for lower-priced sales to farmers and other groups hit hardest. Such a plan faces significant administrative challenges — deciding which refiners contribute the lower-cost fuel and who qualifies for it. But an agreement along those lines looks more likely than an outright ban.

Any deal or executive order that interferes with market mechanisms would make the US refining sector less efficient. Even so, with retail diesel prices close to record levels and the midterm elections on 3 November approaching, pressure on the administration to act will only grow.