U.S. Gas Prices Set to Rise If Diesel Exports Are Banned, Morgan Stanley Warns
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**Morgan Stanley Warns That Restricting Diesel Exports Could Drive US Gasoline Prices Higher**
A potential ban on U.S. diesel exports could trigger an unexpected spike in gasoline prices, according to a recent analysis by Morgan Stanley. The warning comes as policymakers debate trade restrictions in response to record-high domestic diesel costs.
In a report covered by Bloomberg, Morgan Stanley analysts explained that blocking diesel exports would likely force domestic refiners to scale back operations. Because diesel and gasoline are refined simultaneously, cutting back on refinery runs to avoid overflowing diesel storage would inherently reduce gasoline production. This supply contraction would ultimately drive gasoline prices even higher.
Currently, American drivers are already facing elevated fuel costs. According to AAA data, the national average for regular gasoline recently reached $4.47 per gallon, up from $4.10 a month prior and significantly higher than the $3.17 average recorded at the same time last year. Meanwhile, diesel prices have surged to $6.52 per gallon, compared to $3.69 during the same week in 2025.
The debate over trade limits has created friction within the government and the energy sector. While some Republican lawmakers, including Iowa Senator Chuck Grassley, have advocated for an export ban to shield farmers and truckers from soaring fuel bills, the administration has sent mixed signals. Despite earlier hints of a potential restriction from President Donald Trump and Treasury Secretary Scott Bessent, the White House later denied that a ban was being planned.
Energy Secretary Chris Wright also voiced strong opposition to the proposal, stating that banning diesel exports is a “blunt tool” that would fail to achieve its intended goals.
Industry representatives have echoed these concerns. A coalition of over 30 business, energy, and manufacturing organizations recently sent a joint letter to the White House, warning that export curbs would ultimately restrict overall fuel manufacturing, tighten domestic supplies, and increase financial pressure on American consumers and businesses.
