Oil industry launches lobbying push against Trump's diesel export restriction

Wright favors voluntary export limits over an outright ban

The American Petroleum Institute and major oil-and-gas executives launched a lobbying campaign within hours of President Trump publicly suggesting Tuesday that the United States could ban diesel exports. The campaign brings together a top trade group, chief executives of the largest U.S. oil companies, and senators with established relationships inside the Trump administration.

API Chief Executive Mike Sommers issued a statement Tuesday condemning any export restriction as a move that “would only compound the problem” of rising diesel costs. The trade group separately issued a press release warning that “restricting U.S. diesel exports would wreak havoc on fuel markets at home and abroad, destabilize refinery operations and deepen a global refining crisis already putting upward pressure on U.S. prices.”

A loose group of chief executives affiliated with API and the American Fuel & Petrochemical Manufacturers began contacting administration officials the same day, according to people close to the situation. Chevron Chief Executive Mike Wirth and Phillips 66 Chief Executive Mark Lashier led the calls, with ExxonMobil and Valero executives also participating, the people said. The executives have different relationships with different members of the administration and have used those contacts to make their discontent known, the people said.

On Wednesday, more than 30 business, energy and manufacturing groups — including API, AFPM and the Business Roundtable — sent a letter to Trump urging him to reject export restrictions. “While we understand the urge for a silver bullet, there are no easy answers,” the letter said.

The lobbying reflects the stakes for an industry that sees an export ban as an existential threat to a refining-and-export business that could be disrupted by restrictions on outbound shipments, and could cost the industry billions of dollars. Oil-and-gas producers sell a large chunk of their product to refiners, who then turn it into fuel and export it; bottling up diesel production risks congesting the whole energy chain.

Sen. Ted Cruz of Texas and Louisiana Republicans have also been among those the industry has been able to rely on in the effort, according to people aware of the interactions.

Inside the administration, Energy Secretary Chris Wright and Interior Secretary Doug Burgum have publicly opposed a full ban. On Tuesday night, after U.S. oil executives relayed their concerns to Trump officials, Wright called the chief executives of multiple oil companies and conveyed that he favored a measure that would fall short of an export ban while addressing Trump’s desire to lower diesel prices, according to people close to the industry.

In remarks on the sidelines of the United Nations General Assembly on Wednesday, Wright said the administration has to keep the world supplied with diesel. “The president’s just looking for what’s the most constructive way to stop the rise of diesel prices in the United States without breaking a very complicated supply chain distribution system,” Wright said.

Wright told reporters Wednesday that any plan to limit exports would be voluntary for American fuel makers, with details to come “relatively soon.” A spokesman for the Energy Department said: “The Trump administration, including Secretary Wright, continue to work closely together as they consider a variety of options to help lower energy costs for the American people. Ultimately, President Trump will make the final decisions.”

Treasury Secretary Scott Bessent, whom industry figures consider one of the most influential actors in Trump’s orbit on the export-ban question, is seen as not fully supporting a ban, some of the people close to the industry said.

Even so, the administration remains divided. Some officials have argued internally in favor of limiting exports ahead of the midterm elections, while others have pushed back or proposed less stringent measures. Measures to limit exports appear to still be under consideration among Trump officials, but it is unclear what shape such a measure would take, the people close to the industry said.

The industry does not expect a ban to be imminent and is still working to kill the idea, the people said. As alternatives, the industry is urging the administration to relax authorization requirements for Jones Act waivers that allow fuel to be transported between U.S. ports, to push China to export more fuel, and to support a federal fuel-tax holiday. The federal tax is 18.4 cents a gallon on gasoline and 24.4 cents on diesel.

Executives have also raised the possibility of adjusting fuel-blending requirements under the Renewable Fuels Standard, an approach some estimate could lower gasoline prices by 40 cents a gallon. But the industry sees that as a political impossibility, given that reducing ethanol requirements could disrupt corn-dependent economies in Iowa and other Midwestern states, the people said.

Oil lobbies and their executives have been preparing for a possible ban on energy exports since the start of the Iran war, initially anticipating restrictions on crude exports. Diesel, whose price has exploded, became the administration’s target instead.