The Trump administration is examining whether a diesel export ban is feasible. Treasury Secretary said this out loud. Republican lawmakers want to stop diesel from leaving the country because diesel prices are high and farmers are mad and truckers are mad and there's an election in November. Connect those dots however you'd like.
This is the same party that spent forty years explaining why price controls and export bans destroy markets and create shortages and turn prosperous nations into Venezuela. But that was back when diesel cost $2.80 a gallon and farmers weren't calling their congressman every four hours.
The plan works like this: ban diesel exports, keep more diesel in America, prices fall, farmers stop complaining, Republicans win midterms, everyone gets a medal. What could go wrong besides refineries cutting production because export margins disappeared, domestic supply tightening six months later, and diesel hitting $8 a gallon right before the 2024 primaries?
Futures traders are pricing none of this in. They're too busy learning what contango means on Reddit and asking if they should buy USO calls because gas is expensive. Zero concept that banning exports might affect future supply curves. Zero awareness that politicians promising to fix prices rarely fix prices. Just vibes and a Robinhood account.
The Treasury Secretary used the word "examining." That's how you know it's serious. Examining means we formed a committee to study whether we can blame OPEC or Biden or Chevron when this backfires. Feasible means we haven't figured out if this violates twelve different trade agreements yet but we'll work on that later.
Farmers wanted cheaper diesel. Republicans offered export bans. The invisible hand just became the invisible middle finger.
Photo by Gautam Krishnan on Unsplash
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