US oil and gas executives surveyed by the Dallas Fed say diesel prices will not return to 2025 levels for more than a year. The fuel crisis, driven by the Iran war and Ukrainian strikes on Russian refineries, has pushed diesel to record highs and now has Washington weighing an export ban and Texas declaring a statewide disaster.
Diesel prices will not return to normal for more than a year, according to US oil and gas executives surveyed by the Federal Reserve Bank of Dallas. Almost half of the 100 companies polled in the anonymous Dallas Fed survey expect prices to take more than four quarters to return to 2025 levels.
The findings point to a fuel crisis with staying power. Iran's war and Ukraine's attacks on Russian refining facilities have squeezed global diesel supply, and the Dallas Fed's anonymous survey format often gives a candid view of US energy policy.
Washington weighs an export ban
US diesel hit a record $6.50 a gallon earlier this month, surpassing the previous peak set in 2022. On Monday, Donald Trump held talks with advisers over whether to impose a diesel export ban to bring down domestic prices, while Washington has pressed European allies to release diesel stocks and discussed asking China to lift diesel production.
An export ban would lower prices domestically in the short term by keeping more supply at home, but analysts say the strategy would ultimately push fuel prices higher. Buyers in Europe and Latin America, who rely on US exports to offset a shortfall in Middle East production, would face sharply higher prices, according to Rystad Energy chief economist Claudio Galimberti. Domestic US gasoline and jet fuel prices would also rise over time, he said, as Gulf Coast refiners would eventually be forced to cut runs.
Texas declares a fuel disaster
The price surge has hit farmers and small businesses in the US, and Republicans fear a voter backlash in the November midterms unless costs ease. In Texas, where a US Senate race has tightened unexpectedly, Governor Greg Abbott declared a statewide disaster over diesel prices on Monday and lifted some restrictions on commercial transportation.
The proclamation allows dyed diesel, an off-road fuel normally barred from public roads, to be used on Texas roads, and Abbott asked the EPA to temporarily waive federal ultra-low sulphur diesel requirements. According to the Financial Times: "Texas agriculture and freight run on diesel", Abbott said, adding that farmers and truckers can now move crop and timber loads at a higher weight.
Source: Financial Times
Trading involves risk.
Risk Disclaimer
