Two of Louisiana’s major business groups are pushing back against Gov. Landry’s call for a 90-day ban on U.S. diesel exports, warning that such a move could force refineries to reduce production and ultimately drive fuel prices even higher.
Tommy Faucheux, president of the Louisiana Mid-Continent Oil and Gas Association, says the problem is that the nation lacks sufficient pipeline capacity to redirect export-bound diesel into domestic markets.
“Pipelines for domestic diesel transportation are already at max capacity,” Faucheux said in a statement issued Monday. “Without available capacity to redirect supply, halting the export of American diesel would force refineries to reduce production which would also decrease the production of gasoline. This is a misguided proposal that would cause more harm and increase, not decrease, costs for American families and businesses.”
The Louisiana Association of Business and Industry is raising similar concerns.
Will Green, LABI’s president and CEO, says he shares Landry’s goal of lowering fuel costs, particularly for farmers and trucking companies, but questions whether an export ban would accomplish that.
“The result could be precisely the opposite of what policymakers intend: less refining; fewer total gallons of diesel, gasoline and jet fuel; tighter inventories; and higher prices—effectively trading a diesel problem for a broader fuel supply problem,” Green said in a statement shared with Daily Report.
Green argues that crude prices and global refining conditions, not export access alone, are major drivers of diesel costs, and says Louisiana refiners are too integrated into national and global markets for an export restriction to eliminate those pressures.
“Keeping the pricing, accessibility and export of Louisiana’s crude oil and natural gas free of unnecessary governmental barriers lets supply and competition, not mandates, put downward pressure on prices,” Green says.
U.S. Energy Secretary Chris Wright has played down the possibility of a U.S. diesel or fuel export ban, saying the Trump administration’s focus is on boosting domestic production rather than restricting global shipments.
Landry, for his part, is framing the proposal as a straightforward way to boost domestic supply and bring down prices.
“Putting in place a 90-day export ban certainly would create a supply of diesel in the country, which would cause diesel prices to fall,” Landry told CNBC on Monday. “Right now, a record amount of diesel is going to Europe, and Americans are subsidizing Europe’s problems. Why? Because of the war in Ukraine and the issues in Iran. And Europe has done nothing to help America in either one of those two positions. They’re sucking the energy out of America and making American citizens pay for it.”
Landry also asked federal officials to “make the small refinery exemption permanent.” The exemption allows small refineries to bypass the federal requirement to blend biofuels like ethanol and biodiesel into their gasoline and diesel if they can demonstrate that doing so would cause them “disproportionate economic hardship.”
Currently, refineries must reapply for the exemption each year.
“Those refineries account for about 10% of the domestic fuel output,” Landry told CNBC. “They’re scattered around the country and they’re very important to our ag industry. Of course, we’re seeing commodity prices rise. We need to give our farmers relief.”
Landry’s call for an export ban comes as diesel prices surge. U.S. diesel prices have climbed above $6 per gallon for the first time in history, a spike driven largely by supply disruptions tied to the conflicts in Iran and Ukraine.
