The Trump administration has asked several European allies to release diesel fuel from their national emergency stockpiles in an effort to increase global supplies and tamp down on soaring prices. The average U.S. price of diesel has soared by 70% since the war with Iran began, hitting $6.38 per gallon Thursday, according to AAA. Less than five weeks before the U.S. midterm elections, Republicans are eager for any way to lower domestic fuel prices.
Energy Secretary Chris Wright appeared confident this week that Europe would agree to tap its diesel reserves. Trade Representative Jamieson Greer stopped well short of suggesting the European release was a done deal. Also in Milwaukee are trade ministers from China, India, the United Kingdom and other countries affected by tight global diesel supplies.
The message coming from Europe on Thursday was also a cautious one. The E.U. is “in very close contact with our member states on this ongoing issue,” European Commission energy spokesperson Anna-Kaisa Itkonen told reporters at a media briefing in Brussels. The majority of Europe’s emergency diesel reserves are stored in Germany and France.
Both American and European oil refineries have been running at near full capacity for months, churning out as much diesel fuel as possible. While the Iran war is responsible for the lion’s share of price increases in crude oil and unleaded gasoline around the world, the price of diesel has been outpacing both of them since July, albeit for a different reason. Russia has traditionally been a major exporter of diesel, but that stopped this summer after Ukrainian drone strikes destroyed Russian refineries.
On July 8, Russia banned the export of diesel in order to preserve its domestic supply. On Wednesday, the Kremlin extended that ban until the end of October. And we’ve lost diesel exports from China.” “That’s a lot of interruptions,” he said.
But whether Europe will tap its emergency reserves of diesel to increase global supply is complicated by the fact that the Trump administration is actively considering a move that is effectively the opposite of what it is asking Europe to do. On Wednesday, the president mused about imposing a ban on exports of U.S. diesel. An export ban on U.S. diesel would hit European countries particularly hard.
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