Morgan Stanley Warns of Gasoline Price Spikes from Diesel Export Ban

The mechanism behind this price hike is rooted in the architecture of American refining. Because diesel and gasoline are produced simultaneously, refiners cannot isolate the output of one without disrupting the other. Analysts note that a total export ban would lead to a rapid accumulation of diesel inventory, forcing facilities to reduce utilization rates within weeks to avoid storage bottlenecks. This slowdown would inevitably stifle gasoline production, further straining a market where retail prices are already averaging $4.47 per gallon.

Political tension surrounding the issue persists despite White House denials that a formal policy is under development. Pressure continues to mount from figures like Senator Chuck Grassley, who argues that current record-high diesel prices—now at $6.52 per gallon—demand intervention. Conversely, Energy Secretary Chris Wright has dismissed the proposal as a blunt instrument that would ultimately tighten supplies and increase costs for consumers. A coalition of more than 30 trade groups echoed this sentiment, formally urging the administration to reject restrictions they claim would destabilize the domestic energy landscape.