Morgan Stanley: Diesel Export Ban Would Push U.S. Gas Prices Higher

Analysts at Morgan Stanley told Bloomberg that a ban on U.S. diesel exports could produce the unexpected outcome of higher domestic gasoline prices. Their note argues that limiting diesel shipments abroad would quickly overwhelm available storage, compelling refiners to lower refinery utilization rates. Because gasoline and diesel are co-produced in refinery runs, any reduction in throughput would also cut gasoline output. Morgan Stanley said those production declines would tighten U.S. gasoline supplies and push retail prices higher from already-elevated levels. AAA data cited in the report put the national average regular gasoline price at $4.4744 per gallon on Sept. 23, up from $4.10 a month earlier and well above the $3.17 average at the same time last year. Diesel prices have surged as well, reported at $6.52 per gallon in the article. The idea of restricting diesel exports has surfaced amid a broader debate over high fuel costs. Some Republican senators, led by Iowa’s Chuck Grassley, have called for a ban in response to record diesel prices that are straining farmers and truckers. President Donald Trump and Treasury Secretary Scott Bessent were reported to have hinted at the possibility, although the White House later denied that a ban was in the works. Industry and administration voices pushed back against export restrictions. More than 30 U.S. business, energy and manufacturing groups warned in a joint letter that export bans would reduce fuel production, tighten supplies and raise costs for families, farmers and truckers. Energy Secretary Chris Wright also said a diesel export ban would be a blunt tool that "definitely doesn't work."