The Diesel Rescue That Does Not Add Any Barrels

U.S. on-highway diesel averaged $6.529 a gallon in the week of Sept. 21, a record in Energy Information Administration data that starts in 1994. That print is $2.790, or 74.62%, above the $3.739 average a year earlier and $0.719 above the 2022 weekly high of $5.810.

Harvest states have already opened a hole in dyed-fuel law. Washington is still arguing over an export curb that Energy Secretary Chris Wright says would cut gasoline and jet fuel too.

A Record $6.529 at the Diesel Pump

The EIA’s Sept. 22 release put the national on-highway diesel at $6.529 for the week of Sept. 21, up $0.244 from $6.285 the week before. Regular gasoline, by the same survey, averaged $4.478. The diesel number is the highest weekly U.S. average in a series that begins in 1994.

The climb has been fast. The national average was $5.454 on Aug. 17, $5.599 on Aug. 31, and $5.967 on Sept. 7. In four EIA prints it crossed from the mid-$5 range through the old 2022 high and into record territory, with the Midwest harvest belt paying more than the Gulf Coast, where the export surplus sits.

EIA ON-HIGHWAY DIESEL, WEEK OF SEPT. 21

Midwest diesel at $6.680 is $0.503 above the Gulf Coast’s $6.177. That spread is the map of the fight: grain country is paying the harvest premium, while Gulf refiners still make more diesel than nearby buyers can take. Distillate stocks were 107.431 million barrels in the week ending Sept. 18, down from 124.68 million barrels a year earlier.

Trump Tells Advisers to Keep the Fuel Home

President Donald Trump backed a curb on foreign diesel shipments on Sept. 22, speaking to reporters at the United Nations before a meeting with Ukrainian President Volodymyr Zelensky. Farm-state Republicans, including Sen. Chuck Grassley of Iowa, had already been pressing for action with the November midterms in view.

I’ve said let’s not send out the diesel. We make a lot of diesel. I’ve called for it. I’ve called for it within my people.

President Donald Trump, to reporters, United Nations, Sept. 22, 2026

The remark hit a market already short of distillate after the war with Iran squeezed flows through the Strait of Hormuz and Russia extended its own diesel export halt. U.S. futures softened on the prospect of barrels trapped at home. European prices jumped the next day as traders priced the loss of their largest overseas supplier.

Oil executives and the U.S. Chamber of Commerce, the Business Roundtable, the National Association of Manufacturers, and the American Petroleum Institute sent Trump a joint letter dated Sept. 24. They told him a ban would “lead to less fuel production, tighter supplies and rising costs for American families, farmers and truckers,” and that “the opposite would occur” if exports were blocked to cut prices.

What a Ban Would Do to Gasoline and Jet Fuel

Wright spent Sept. 23 walking the idea back in public. At an Economist event in New York he called a ban a tool that fails on its own terms, because diesel is not a tap that can be shut without shrinking the rest of the barrel.

The blunt tool of banning diesel exports definitely doesn’t work. If you can’t export the diesel that comes out of our refineries, you run out of places to store it, and you have to reduce U.S. refining, which would put upward pressure on gasoline prices and jet fuel prices.

Chris Wright, Energy Secretary, Economist event, New York, Sept. 23, 2026

Later the same day, at Heatmap House during New York Climate Week, he said, “We will not cease exports of U.S. diesel,” and that a blanket ban was not under serious consideration. “Nobody wants a full blanket ban or zero exports of diesel,” he said at a New York Times event. “That’s not being discussed.”

On Sept. 24 in Allentown, Pa., he switched from a legal cutoff to a request. He said he had told refining executives to “reduce a little bit your exports overseas” and “put some more diesel into the United States.” People working with those companies said a coordinated voluntary cut could run into federal antitrust law. Interior Secretary Doug Burgum had already warned that other countries could hit back at U.S. fuel imports. Treasury Secretary Scott Bessent was assigned to test whether any curb, full or partial, was even feasible.

WHAT WE KNOW

• The pump print: EIA’s week of Sept. 21 average is $6.529 a gallon, a record in data back to 1994.
• The cabinet split: Trump called for keeping diesel home on Sept. 22; Wright has said a blanket ban is not being discussed.
• The live orders: Louisiana, Alabama, and Nebraska have suspended state penalties on dyed diesel in qualifying farm and timber highway vehicles.

WHAT IS UNCONFIRMED

• Any export rule: No 90-day ban has been signed, and no voluntary cut has been announced by refiners.
• IRS relief: All three states have asked for federal penalty relief; none has been granted.
• A tax holiday: A federal excise suspension still needs Congress, and the House is in a pre-election recess.

A ban does not create diesel. Gulf tanks fill, refiners cut crude runs, and gasoline and jet fuel tighten with the diesel they used to make from the same barrel. Justin Wolfers, a University of Michigan economist, put the same tests in three questions on Sept. 26: can the fuel be stored, what else is made with it, and does the policy add supply.

Europe Buys the Barrels Washington May Hold

The American Petroleum Institute says the United States supplies about 1.5 million barrels of seaborne diesel out of about 8 million barrels a day traded by sea, roughly a fifth of that seaborne market. Kpler data show six of the seven largest buyers of diesel processed in U.S. refineries, a group that totals 1.5 million barrels a day, sit in Europe or Latin America: Brazil, Chile, Mexico, Peru, France, and the United Kingdom. Morocco is the exception on that list.

WHERE THE EXPORT BARRELS GO

• Seaborne share: API puts U.S. supply at about 1.5 million of 8 million barrels a day traded by sea.
• Largest buyers: Kpler’s top U.S.-refined diesel customers are clustered in Europe and Latin America.
• Winter fuel: Heating oil is close enough to diesel that a lost cargo shows up in New England cellars as well as in European tanks.
• The Gulf outlet: API says Gulf Coast plants make more diesel than the region can burn, and exports are how those units keep running.

Mark Wolfe, executive director of the National Energy Assistance Directors Association, has said heating-oil bills may exceed $2,000 this winter for some New England households. Europe is already running without Russian diesel and without the usual Middle East barrels that used to move through Hormuz. Pulling U.S. cargoes on top of that does not lower a global price. It reallocates a shortage.

Industry leaders also told the administration that any export limit would need a wider Jones Act waiver so Gulf barrels could move on foreign-built ships to other U.S. coasts. Without that, diesel trapped in Texas and Louisiana does not become cheaper fuel in Iowa.

The Red Tank Opens in Louisiana, Alabama and Nebraska

The policy that is actually in force is older, narrower, and red. Dyed diesel is the same fuel with a red marker that shows the highway excise was never paid. Farmers keep it for tractors, skidders, and pumps. Putting it in a licensed highway truck is normally a state and federal offense. Three governors spent the week after Trump’s UN remarks suspending their own penalties so harvest trucks could burn the tank already on the farm.

Gov. Jeff Landry’s Louisiana harvest emergency order took effect Sept. 23 and runs through Oct. 22, 2026, for vehicles registered as Class 2 (forest products) or Class 5 (farm use). His office put the state average at an all-time high of $6.03 a gallon, 112% above the price the LSU AgCenter used in its 2026 crop budgets. Louisiana’s motor-fuel tax on diesel is 20 cents a gallon; off-road fuel skips that levy and the federal tax, a gap of about 44 cents. Jim Simon, general manager of the American Sugar Cane League, said the order could mean more than $8 million in savings for sugarcane farmers over the 2026 harvest.

We’re not going to sit on the sidelines while Louisiana farmers are paying record prices to harvest the crops that feed our families and support our economy. We have an opportunity to provide immediate relief, and that’s exactly what we’re doing.

Gov. Jeff Landry, executive-order statement, Sept. 23, 2026

Gov. Kay Ivey on Sept. 24 told the Alabama Law Enforcement Agency to halt dyed-diesel enforcement for 120 days and to focus inspections on public safety. AAA listed Alabama diesel at $6.145 that day. Gov. Jim Pillen of Nebraska signed a 90-day fuel emergency the same date. Guidance issued Sept. 25 said the relief covers highway-registered agricultural vehicles, including pickups and service trucks running to the field, and that “98% of our big semis, thousand-bushel semis” would usually be able to use red diesel. Producers can burn dyed fuel or buy clear diesel and file Form 84AG for a state refund.

THE THREE HARVEST WAIVERS

None of the three orders binds the Internal Revenue Service. Landry directed Revenue Secretary Jarrod J. Coniglio to seek federal penalty relief. Ivey told the Alabama Department of Revenue to do the same. Nebraska Tax Commissioner Jim Kamm has asked the IRS as well. Until Treasury answers, a grain truck on red fuel still faces the federal civil penalty even if the state trooper looks away.

The 24.4-Cent Tax Cannot Cover This Spike

Oil executives have been lobbying for a temporary suspension of the federal diesel excise instead of a trade curb. The House is in a pre-election recess, so that bill is not moving. Changes to biofuel-blending rules have also stalled in farm-state politics ahead of the midterms. Even if Congress came back tomorrow, the levy is small next to the pump.

Federal Highway Administration tables still list a 24.4-cent federal diesel tax, a rate in place since Oct. 1, 1997. Gasoline is 18.4 cents. Strip the whole diesel tax off the EIA print and the national average falls to $6.285, which is last week’s price, not last year’s.

WHERE THE 24.4 CENTS GO

• Highway Account: 21.44 cents funds federal road and bridge work.
• Mass Transit Account: 2.86 cents is dedicated to transit.
• LUST fee: 0.1 cent goes to the Leaking Underground Storage Tank trust fund, and that sliver still sits on dyed fuel.
• Share of the pump: 24.4 cents is 3.7% of $6.529, and it matches the entire $0.244 jump from the week of Sept. 14.

Red diesel exists so that money is not collected on tractors and heaters. IRS Publication 510 still describes a penalty of $1,000 or $10 a gallon, whichever is greater, for putting dyed fuel in a highway vehicle. After Hurricane Helene in 2024, the IRS waived that penalty in parts of the Southeast only if the operator still paid the 24.4 cents. A state of emergency in Baton Rouge does not rewrite that code.

Ivey’s pause and Pillen’s refund change who writes the state check. They do not add a gallon of ULSD at a rack. They also punch a hole, for a defined class of trucks, in the dye system that has funded highways since the early 1990s.

Surplus Gulf Diesel Has Nowhere Else to Go

Mike Sommers, president and chief executive of the American Petroleum Institute, said on Sept. 22 that restricting exports “would only compound the problem.” His statement argued for more supply and more flexibility, not a new barrier. API’s longer note the same day said Gulf plants need the foreign outlet because geography and pipes cannot move every surplus barrel to every U.S. county that wants cheaper fuel.

That is the bind the White House is in. A tax holiday of 24.4 cents would reprint last week’s average. A dyed-fuel waiver helps the farmer who already has a red tank and a Class 5 plate, and it leaves the long-haul carrier on clear diesel at $6.680 in the Midwest. An export curb would, on Wright’s own telling, shrink gasoline and jet fuel once Gulf storage fills. Europe and Latin America would bid for whatever still sails, and New England heating oil would move with that bid.

Wright has said the administration will keep talking to refiners about getting more diesel into U.S. tanks without a blunt cutoff. No voluntary deal has been posted. No IRS letter has matched the Helene-style relief the three capitals asked for. Harvest trucks in Louisiana can legally burn red fuel, under state law, through Oct. 22. The national pump, as of the week of Sept. 21, is still $6.529.