Goldman expects initial diesel price decline under US export curbs
USO•Goldman Sachs said a US diesel export ban would initially put moderate downward pressure on diesel prices. While storage capacity remains available, each week of a ban could lower average US retail diesel prices by about 25 cents per gallon, the bank estimated.
1. Initial price impact
Goldman Sachs said a US diesel export ban would initially put moderate downward pressure on diesel prices, and that export restrictions, including quotas, were a plausible outcome. As long as storage capacity remained available, each week of a ban would reduce average US retail diesel prices by about 25 cents per gallon, or just under 4% from $6.50 a gallon, the bank estimated.
2. Possible effects elsewhere
Goldman said a prolonged ban would likely put upward pressure on gasoline prices because diesel, gasoline and jet fuel are largely produced together. Once diesel storage is full, each week of a ban would likely add $0.30 per gallon to US retail gasoline prices, it estimated. The bank also estimated that each week of a ban would lift European wholesale diesel prices by $3 a barrel, or just under 2%; European strategic reserve releases might offset about half of that increase.
3. Policy comments
President Donald Trump backed the idea of banning US diesel exports on Tuesday. Energy Secretary Chris Wright said on Wednesday that a ban would not work and could instead raise gasoline and jet fuel prices.
