With domestic diesel prices temporarily elevated, some in Washington advocate an idea with simplistic appeal but potentially disastrous consequences.  

Namely, why not simply prohibit American refiners from exporting diesel fuel?  

Prohibit overseas shipment, the argument goes, keep it here, increase domestic supply and watch prices fall.  

Global and domestic energy markets, however, don’t function as simplistically as bad ideas out of Washington, D.C.  

According to United States Energy Information Administration data, American exports are averaging approximately 1.67 million barrels per day for the month of September.  Consequently, some policymakers look at those exports and imagine a reservoir of supply that could simply remain home instead.  

Informed analysts, however, wisely warn that an export ban would actually make matters worse, emphasizing the reality that diesel awaiting export on the U.S. Gulf Coast won’t simply or suddenly become available at filling stations in Pennsylvania, Iowa, California or elsewhere.  

That’s because existing pipelines presently carrying refined products from the Gulf Coast to other regions across America possess finite capacity, and much of that infrastructure is already heavily utilized.  Consequently, suddenly banning exports would leave excess diesel stranded along the Gulf Coast, not magically available for redirection to whichever American communities need it most.  

In turn, with diesel piling up, refiners would have an economic incentive to reduce refining.  Producers suddenly confronted with unsellable surplus would obviously reduce production.  

That means less diesel, not more – precisely the opposite of what export ban advocates intend.  

None of that is merely theoretical.  As Patrick De Haan of GasBuddy explains, it’s textbook basic economics:  

The U.S. is not short of diesel.  The world is.  The U.S. is a structural diesel surplus producer.  Refineries in the U.S. produce roughly 5.3 million barrels of distillates per day against demand of around 3.6 million barrels per day domestically.  The current price spike here and globally is not a U.S. problem – it’s not a domestic shortfall.  It’s a global one, being driven largely by Ukrainian drone strikes on Russian refining capacity, in one of the most significant diesel producers in the world, a country that typically supplies one in nine barrels of the world’s diesel, compounded by the conflict with Iran closing the Strait of Hormuz…  

U.S. diesel prices are determined not by a U.S. supply and demand balance, but a global one.  Keeping distillates and diesel home does not change the world price that reference our prices.  You can’t fence off a globally traded commodity by executive order and expect the global price to stop applying to it…  

Supplies leave because the world is paying more, not because politicians are forcing them to.  An export ban would shove that diesel back into a domestic market that’s already well supplied, risking refinery run cuts, while doing nothing about the global shortage that is actually the mechanism leading diesel to record levels.  

Accordingly, today's temporary diesel problem is fundamentally global in nature, not domestic.  

That's the dangerous paradox at the heart of any proposed export ban.  Even if government can mandate where diesel cannot go, it can’t repeal geography, instantly increase pipeline capacity or force refiners indefinitely to produce something they cannot profitably sell while it accumulates and overruns storage capacity.  

Simply put, America has become a more important supplier into a stressed global market, and removing American diesel from that market won't eliminate global demand, it will simply reduce supply.  That, in turn, will worsen diesel pricing problems rather than relieve them.  

An export ban that further tightens global supplies would thus trigger higher prices in the domestic U.S. market that policymakers hope to protect. 

To be sure, the underlying frustration motivating calls for a diesel export ban is easy to understand.  Farmers, truckers, manufacturers and everyday consumers don't experience high diesel prices as an abstract exercise in global commodity economics.  They experience them by way of higher costs for virtually everything transported across America.  

The economic reality, however, is equally straightforward and ultimately sound:  We cannot solve a global shortage by adopting a policy that risks reducing production even more, and we cannot make diesel appear in places like Ohio by simply preventing it from leaving Texas.  

It’s natural that the most politically attractive solutions are often attractive precisely because they compress complicated problems into simplistic, superficially appealing slogans.  

We can’t allow simplistic slogans to make matters worse, however, which is all that a diesel export ban would accomplish.