Trump considering a ban on diesel exports

The Trump administration says it plans to put a 90-ban on diesel exports — possibly. In a single day, there are conflicting reports that say there is a 90-day ban under discussion and others that say the White House has denied those claims. To get a sense of what's going on — and if curbing diesel exports would bring down diesel prices — RealAgriculture's Lyndsey Smith is joined by Jim Wiesemeyer, of Wiesemeyer's Perspectives with AgBull Media. As of Wednesday afternoon, it's still unclear if a ban on exports is in the works and how will this affect Canada. One of the biggest questions is if Canada will be exempt from this ban because of USMCA. For right now, it will all depend on the U.S. scope, exemptions, and legal justifications cited, says Wiesemeyer. If the ban does go forward, it may lower diesel prices in the short-term, however the long-term impacts would be the opposite. "Energy Secretary Wright said Wednesday, today, that officials are working with refiners on voluntary cooperative measures to increase domestic diesel availability," says Wiesemeyer. "He said no decisions had been made, which tells you it's a live thing." More to come... Trending A growing disconnect between United States bond yields and the Federal Reserve’s interest rate policy is creating ripple effects across Canadian credit markets. With U.S. national debt approaching $40 trillion, rising bond yields are driving up government borrowing costs and forcing administration officials to closely monitor fixed-income markets. In a recent RealAg Radio interview, Farm... Read more » I'm Lyndsey Smith with RealAgriculture. Joining me now, it's Jim Wiesmeyer with Wiesmeyer's Perspectives at Ag Bowl Media. Welcome here, Jim. It's always good to be on, and we have to do something to make that vacationing Haney look good, right? That's right. That's what we're doing here. And also, he's doing a pretty good job of being on vacation, but this potential diesel export ban has got him out of the woodwork. And part of the reason why we're talking, I'm We're trying to make heads or tails of this, Jim. Bring us up to speed at least here. We're talking, you know, Wednesday afternoon. I do think we should timestamp it. Absolutely. Yeah. Where are we? About 10 minutes before Xi Jinping arrives at Andrews Air Force Base, by the way. Here's the issue in a nutshell. We're in the last maybe hours of the White House making a decision. That means It makes sense out of the conflicting reports that's coming out on this because Politico initially reported that a 90-day ban was under discussion. I can confirm that, that it was. Then Reuters came out and said, no, the White House denied that. Well, I don't know whether I believe that, but let's, let's go through it. Okay. These are one of the options where a 90-day ban is under discussion, but the administration is preparing a temporary diesel export ban. Okay. Now, Trump favours restrictions, President Trump. He wants more diesel kept in the United States to reduce record prices. And USDA Secretary Brooke Rollins has pressed for relief for farmers. But Treasury Secretary Scott Bessent is examining, and he said this, whether a full or partial restrictions plan would work. Now, and that's what I've heard. Now, energy officials in the Trump administration warn of a potential backfire. Mm-hmm. Energy Secretary Chris Wright has said trapped diesel could fill storage and force refiners to cut production, and that would reduce gasoline and jet fuel supplies. And Interior Secretary Doug Burgum He also warned that trading partners could retaliate against U.S. energy imports. Now, right before you called, I got off the phone with an administration source and they said that's true in the long run, but in a 90-day potential ban, there's not going to be a storage problem. Right. It takes a while to fill that storage. So I don't think that's a major Now, an alternative remains alive. Secretary— Energy Secretary Wright said Wednesday, today, that officials are working with refiners on voluntary cooperative measures to increase domestic diesel availability. Domestic. He said no decisions had been made, which tells you it's a live thing. Now, I ask about Canada. Good. Canada's not automatically exempt because of the USMCA or whatever you call it. Yeah. Okay. Article 2.11, I was told, generally prohibits export restrictions between USMCA members, and that gives Canada legal basis to oppose a ban. But Canada's actual treatment, I was told, would depend on the US measure scope, exemptions, and legal justification. So Washington could invoke provisions covering Temporary critical shortages are essential security, but whether those exemptions justify a particular ban, that's going to depend on the circumstances. So simply calling it a 90-day emergency measure does not establish compliance. Now, I was told that buyers, Canadian buyers dependent on U.S. diesel, and you have more than a few, could find replacement cost and delivery disruptions, but it would be costly. Domestic refining provides a cushion. And I know you know this, Ontario and Quebec together are net diesel exporters. So a US ban would not necessarily cause a nationwide Canadian shortage. But I believe you told me before we went live that that doesn't solve all Canadian farmers' problems because they rely on the US for diesel. Is that true? Well, and so, and that's what we're trying to figure out here is that Canada, I think that often we think, well, We're a net energy exporter, so we should have plenty. But energy is not all the same, right? So we are— we do import quite a few different products from the US, diesel being one of them. It looks like BC may be— that may be an issue, is the West Coast may be most impacted by this. But, but Jim, I think one of the things that even on the US, on the continental US discussion, is that Just because prices are high, it doesn't mean that the U.S. supply is necessarily low. It's just areas that are maybe short. It's the global price that really is the issue. So this measure, that 90 days, to me, that just aligns quite well with the midterm elections, is I guess— am I being cynical, Jim? No, you're not being cynical because internal polling at the White House, I will tell you, Farmers who— 60 to 65% of the rural vote, not just farmers, of the rural vote, vote Republican. They're starting to see negative polling. That doesn't mean that this group that normally votes in a big way Republican are going to vote Democrat. A significantly significant number, a significant number may not just vote, and they don't want that. That's right. Canadian farmers and truckers, obviously, with any ban, are going to face higher costs if this happens. Happens. So my assessment is that removing US exports would tighten overseas supplies because prices are already going up in Europe as a result of just this conjecture. And that's going to put upward pressure on Canadian replacement costs. So, but an explicit Canadian exemption could, would cushion that impact by preserving access to US barrels of diesel. So that's about The best I think we can explain it, we need to see number one, whether it's going to be a time limit. Number two, what justification do they use? And three, what are the exemptions? Right. And, Anne, from what I've read, and correct me if I'm wrong here, is that realistically there probably would be short-term relief, right, on diesel prices for the continental US. But longer term, and this is where You know, other people weigh in, way above my pay grade, but essentially longer term, this does not accomplish a step down in diesel prices long term. It does not. I agree totally with you. And I don't know whether we've already lost the banner of a reliable trade supplier, but this would increase concern for the future about any agreement with the United States, to be blunt with you. And I'm an American. That there's no such thing as free trade, but you want fair trade. And how do you reach— that's another issue we didn't even discuss is, does this cut across contracts? I doubt it. Yeah. It shouldn't. That's a legal basis. You can't cut across contracts. So yeah, these are issues, but it shows you the political pressure. This is a result totally of the political pressure that the Republican Party is facing right now in the House especially, but also the Senate. You saw a number of Senate Republican state senators, Chuck Grassley again today called for a ban on diesel exports. So you're absolutely right. You're not being cynical. This is political driven. I might be a little bit cynical, Jim, but I'm okay with that. So that's all right too. Okay, Jim Weismeyer, Weismeyer's Perspectives with AgBull Media. Thank you so much for joining me, Jim. Really appreciate it. Anytime. Okay. For the latest ag news, agronomic advice, and more, cheque out RealAgriculture.com and RealAg Radio.