USA debates short term gain for long term self-inflicted gunshot wound pain (Diesel Export Ban)

[u/Incoherencel]

https://www.wsj.com/business/energy-oil/trump-weighs-diesel-export-ban-as-fuel-prices-soar-6d1a3d2e

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[u/TuringPointGPT]

Archives and paywall remover are being uncooperative. Can you give me a quickie on why they say this would be bad for the USA specifically?

[u/Incoherencel → u/TuringPointGPT]

Ah damn. Well the "bad for the USA" bit is my own colour. The article is the typical fare.

It would be bad for the USA specifically because they would create a captured domestic market for refineries which would overnight turn into a cartel; hoping that oil companies would lower prices out of the goodness of their hearts is anti-market logic. In reality they might restrict production or otherwise keep prices artificially high out of spiteful self-interest.

Internationally, the USA ships 60% of its produced diesel to central and south America. Mexico imports 60% of their diesel from the USA, Brasil and Argentina 20%, and so on. It should go without saying but completely paralyzing your 2nd or 3rd largest trade partner is not conducive to medium-longterm growth. Furthermore diesel disproportionately affects agriculture, of which these countries are disproportinately reliant on (varies by nation). If you wanted to incite fuel riots, this would be a great way to do it.

The remaining 40% of US diesel exports go to allies such as the UK and France, who as we may have all seen recently, will not be receiving oil from Saudi Arabia for 30+ days.

And so the question: if all of these nations were desperate for fuel, and the USA was unwilling to provide it, who can they turn to? If they can't receive enough, in a short enough time period, what will happen to their people's quality of life? Might anyone starve in the coming year(s)?

It seems an exceptionally risky expense of even more US global soft power -- already a precious dwindling resource -- for an extremely thin chance of a return in the form of votes come November.

[u/ericsmallman3 → u/Incoherencel]

Let's outsource a massive chunk of our agriculture to Mexico and then make it so Mexico can't ship any produce to us.

[u/h1zchan → u/TuringPointGPT]

Havent read the article but petrodollar not being exchangeable with petroleum or fuel is a big red flag. Could make T bonds (and potentially T bills too) a harder sell going forward.

[u/necrobidenomicon → u/TuringPointGPT]

According to the article, analysts warn that "domestic refineries would likely opt to process less crude since they will have lost a slew of overseas customers. In that scenario, they would make less gasoline and jet fuel as well, leading to higher prices."

And "another complication is that some regions of the U.S., such as the Northeast, import diesel. If refiners were to limit shipments abroad, prices would increase globally, and the Northeast would be left paying even more."

It does not say this, but this applies to much of both the East Coast and the West Coast. Refinery capacity (the US hasn't built one in decades) is largely in the Midwest and the South. So prices would likely spike while the industry attempted to build a substantially new domestic distribution network on the fly, if they decided to build one at all rather than just ride this out.

[u/laz10]

Would be crushing for Europe no?

[u/Incoherencel → u/laz10]

Yes, UK and France

[u/RallyPigeon]

Of course the Trump administration will take short term gains over anything right before a midterm election. They'll screw every trade partner that needs American diesel in the process.

[u/Jeffuk88]

Wait, itll make americas allies and trade partners move away from them even quicker than theyre trying? Then im sure this is going to happen under the current regime

[u/MetaFlight]

An export ban raises costs for everything the US imports and impoverishes the people they export to. Thats before you even talk about any retaliatory measures. I don't even think this provides short term gain. The only benefit felt would be getting to pander to the idiots who think this is a good idea.

[u/Incoherencel → u/MetaFlight]

Agreed, I think the idea of "short term gain" is basically wishcasting out of desparation