US to ban diesel exports? Trump weighs drastic move as White House tells Ted Cruz ‘no’: Report

The White House has assured Senator Ted Cruz that the Trump administration will not ban US diesel exports, the Texas Republican told refining industry leaders on Friday, as the administration weighs ways to bring down diesel prices that have surged to record levels, Bloomberg reported on Saturday.

Cruz conveyed the message during a private call with refining industry representatives, people familiar with the matter told Bloomberg. He said the assurances came from the White House but not specifically from President Donald Trump, and did not identify which administration officials had given them.

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The development follows Trump's comments earlier this week that he had asked his staff to consider a potential ban on US diesel exports after lawmakers from rural and farm states pushed for restrictions to curb prices. Retail diesel prices reached a record $6.53 a gallon earlier this week.

A White House official reportedly noted that Trump wants pump prices to fall and is considering all options. Representatives for Cruz and the American Fuel and Petrochemical Manufacturers Association, which organised the call, did not immediately respond to requests for comment.

Red diesel tax relief among options under consideration

The White House has not made a final decision on how to lower diesel prices and is continuing to assess the economic impact of a short-term export ban, Bloomberg reported.

One option under discussion is expanding the use of dyed red diesel, which is normally reserved for off-road vehicles and is exempt from federal diesel taxes. Allowing wider on-road use could effectively remove the federal diesel excise tax of about 24 cents a gallon for some buyers.

The measure could lower fuel costs for farmers, truckers and other diesel users. Industry representatives have also proposed exempting red diesel from the federal Renewable Fuel Standard, which could reduce costs by about 30 cents a gallon, according to industry estimates cited in the report.

Energy Secretary Chris Wright has said the administration is not pursuing a broad export ban and has instead encouraged refiners to voluntarily increase domestic diesel supply.

"We will not cease exports of US diesel, but may there be some tweak in where diesel flows out of US refineries? I think we are going to see that because it can stop the rise in price of diesel," Wright said in a livestream conversation hosted by Heatmap on Wednesday.

"Are we going to make adjustments with diesel? I think so. But no, I don't think you will see a blanket ban on diesel," he added.

The assurances relayed by Cruz are consistent with warnings from senior Trump administration officials that restricting diesel exports could ultimately worsen supply conditions. However, Trump remains the final decision-maker and has at times pursued policy actions without full backing from senior aides.

(With inputs from Bloomberg)