Mike Summers, President and CEO of the American Petroleum Institute (API), warned in an article published in the Wall Street Journal about the negative impacts of proposed bans on U.S. diesel exports. He stated that these restrictions could lead to reduced production at domestic refineries and, consequently, exacerbate global fuel shortages.
Reasons for Diesel Shortage
According to Summers, the current diesel shortage is due to disruptions in global refining and energy flows, not because of excessive U.S. exports. He pointed to disruptions in the Strait of Hormuz and attacks on Russian refineries as key factors in the reduction of global fuel supply. Currently, diesel prices in the United States have reached over $6 per gallon, and inventories have fallen to historic lows.
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Consequences of Export Ban
Summers noted that the Gulf Coast accounted for nearly 90 percent of U.S. distillate exports last year. He also mentioned that export restrictions could force refineries to cut back production, as this region produces more diesel than it consumes and cannot easily redirect excess fuel to other domestic markets.
According to estimates from S&P Global, an export ban could reduce U.S. refinery production by up to 1.9 million barrels per day and gasoline production by up to 750,000 barrels per day. This production decrease would also impact jet fuel and other refined products.
Instead of restricting exports, Summers called for actions to increase supply and improve domestic fuel logistics. These actions include extending the Jones Act exemptions, easing some provisions of renewable fuel standards, coordinating the release of reserves with allies, and pursuing permitting reforms for energy and transportation infrastructure.
Currently, a Jones Act exemption facilitating domestic energy transportation has been extended until November 15. Summers also emphasized the need to work on restoring energy flows through the Strait of Hormuz, stating that increasing global access to fuel could be a more sustainable solution than limiting U.S. exports.
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