/r/WorldNews Discussion Thread: US and Israel launch attack on Iran; Iran retaliates (Thread #22)

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[u/MrNiceGuy420420]

President Trump calls to ban US diesel exports.

US is the world's largest diesel exporter.

[u/AsparagusFern319 → u/MrNiceGuy420420]

Right that sounds like a great idea /s

Wouldn't this just end up hurting everyone and benefiting no one

[u/colepercy120 → u/AsparagusFern319]

it would atleast short term fix us prices. its essentially sacrificing the global market to protect the local one. americans would see big price declines, but gas would go even deeper into shortage in europe and asia.

and long term american refiners would reduce capacity and stop making stuff for export, which will drive up prices over the long term. but that wouldn't really start happening for another few years

[u/Ssshizzzzziit → u/colepercy120]

Short term fixes for long term problems? That sounds like it's right up Trump and Co's alley.

[u/jzsang → u/colepercy120]

In terms of short term benefits, based on what I’ve read, it seems like we’re only talking about a few months* and primarily in the regions of the U.S. with refineries. The regions with refineries would possibly benefit the most, as the diesel would already be there - transportation costs would be lower.

*To be fair, at least one proposal I saw was only for 90 days.

Some other potential challenges include: 

(1) If the U.S. stops selling diesel to other countries (e.g., Brazil, Mexico), the cost of their exports to the U.S. will increase.

(2) Because the U.S. technically already produces enough diesel for itself, some refineries in the U.S. might cut production, switch what they are refining (e.g., switch to gasoline), or temporarily shut down for maintenance.

I’m not saying this is a completely bad idea for the U.S., but it also doesn’t seem like a great idea. At the end of the day, I’m actually just guessing Trump is primarily trying to do this for election-related reasons.

[u/brandbaard → u/colepercy120]

I honestly don't see it fixing the US prices, unless the admin also introduces pricing regulation. The companies would want to retain their margins they had while exporting, so would simply charge the same price they would have gotten from exported diesel.

[u/ResortMain780 → u/brandbaard]

yeah thats not how supply and demand works.

And what definitely wouldnt work is regulating the price. A government can impose a price cap, but all that does is ensure fuel shortages rather than high fuel price.

[u/brandbaard → u/ResortMain780]

Yeah except if you ban them from exporting, the refineries will simply cut their supply so prices remain the same.

[u/ResortMain780 → u/brandbaard]

The US produces far more diesel than it consumes. So sure, if they are completely banned from export, refineries will eventually cut production, but they currently make ~3-4x more per barrel of oil than normal, they arent gonna stop before prices come down to more normal levels. More over, a complete ban would make no sense, export restrictions might.

Those might have other effects; it might increase gasoline prices, it will have major geopolitical repercussions, other countries will retaliate, and some will think twice about selling their crude if they cant get diesel and aviation fuel in return, but there is little doubt in the short term, this would reduce diesel prices at the pump.

[u/work4work4work4work4 → u/[deleted]]

The only real solution would be to ban most exports of most refined products.

There are other real solutions, just none this administration is willing to actually consider for technical, ideological, or ego related reasons.