Energy Secretary Chris Wright on Wednesday said the Trump administration wouldn't outright ban exports of diesel but rather implement restrictions.
In an interview with WSJ Journal House on the sidelines of the United Nations General Assembly, Wright said the administration wouldn't stop all exports of diesel. He said the administration has to keep the world supplied with diesel but needs to change the trajectory of prices in the U.S.-and the plan would be voluntary.
"We're trying to avoid a blunt hammer of a government policy, understanding the complexity of refining," Wright said.
President Trump said Tuesday that the administration was considering restricting diesel exports, sending the oil-and-gas industry scrambling. It has been desperate to avoid a ban, warning that it risked creating a cascade of unintended consequences that would throttle supplies of diesel and gasoline in the U.S. and lead to higher prices.
Wright's description of how restrictions would work was light on details and is set to raise new questions. Some industry lobbyists noted that discussing restrictions amongst refiners could potentially violate antitrust laws.
Industry trade groups have spoken out against potential restrictions in their most forceful stand against the administration since Trump's return to the White House. The American Exploration & Production Council said "policymakers should reject this short-sighted approach and instead focus on solutions that will actually lower prices at the pump."
Ben Cahill, a nonresident senior fellow at the Atlantic Council, said it might be easier for the administration to eventually lift a cap on exports than a ban, which risks being stickier because undoing it would lift a swift-and unpopular-rebound in diesel prices.
"I think it makes it easier to explain what you're doing," he said.
Trump's endorsement of a diesel-export ban infuriated U.S. oil executives, many of whom blame their ally in the White House for the chaos in oil markets. Some are saying privately that Trump made colossal blunders prosecuting the war with Iran that have now left the president and the oil industry without any good options for mitigating an energy crisis, according to people close to the industry.
Executives are frustrated that the administration appears to be scrambling at the last minute to figure out an export policy that the industry had spent months trying to map out, the people said.
Industry officials were repeatedly assured by Trump's lieutenants that the president understood why export restrictions wouldn't work.
"They should have done basic planning months ago, but they didn't. Now they're scrambling to figure out options," one consultant said. "There's a sense that they're getting tired of this guy making big, swinging, haymaker moves."
The administration had shot down the idea of a ban as recently as last week, when Interior Secretary Doug Burgum said at a G20 event in Houston that "we would consider an export ban if we thought that actually might lower prices, but that's not the case."
Trump officials have repeatedly skewered the Biden administration for pausing new exports of liquified natural gas-a pause Trump then lifted-saying that it had hurt Americans.
Export restrictions, even if they are limited, are bound to have effects up the energy chain, analysts say. Refiners facing restrictions would likely churn out less diesel, which means they would purchase less crude from oil producers.
A gallon of diesel cost $6.52 on average in the U.S. on Wednesday, up 16% in the past month, according to Dow Jones Energy.
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