A Potential Diesel Export Ban’s Effect on Trucking
The 47th president of the United States Donald Trump announced that he, with the growing support of Republican lawmakers, was considering an embargo on diesel fuel exports to other countries, saying that the United States’ citizens need it for themselves. If this were to become reality what effect would it have on the nation’s economy?
Short-Term Price Decrease
Anyone with a basic understanding of economics knows two primary influences on price: supply and demand. If diesel were no longer allowed to be exported outside of the United States, it means that any diesel currently within its borders is for the consumption of the American people. This would cause an increase of supply for the nation, at least in the short term, and prices would fall.
Long-Term Price Increase
The longer that the diesel export ban goes on for, however, the bigger the effect it would have on an increase in diesel fuel down the line. Other nations may retaliate by imposing their own diesel fuel embargos.
Though the United States is one of the world leaders in proven oil reserves, and Trump purported the mantra of “drill, baby, drill” during his presidential campaign, the reality of the situation has left a lot to be desired as oil companies are not extracting the black gold out of the ground at a rate that would be sufficient to replace imports. With less fuel being created than expended, prices would eventually continue their climb.
Conclusion
In a time where diesel and other fuels are experiencing elevated prices, the Trump Administration needs to think carefully about its next moves to not rob Peter to pay Paul, as a diesel export ban with any real length to it would simply move the costs of diesel fuel into the future. The best thing that the Trump Administration could do right now is to follow up on “drill, baby, drill” and get the nation to work on producing as much of its own fuel as possible. With the basic economic law of supply and demand remaining undefeated, the best way to drop prices is to add supply, in a sustainable manner.
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