Diesel Policy: Don’t Ban It, Bank It For Winter

America is not running out of diesel. We are running out of cushion.

U.S. refineries are producing more than 5 million barrels a day of distillate fuel, mostly diesel. Americans use roughly 3.6 to 3.8 million barrels a day.

Recently, we have been exporting more than 1.3 million barrels a day, and in one week in August, exports reached a record 1.88 million barrels.
Meanwhile, U.S. inventories sit at about 13 percent, or roughly 16 million barrels, below the five-year seasonal average, and refineries are running at about 97 percent of capacity. There is little room to simply make more. U.S. inventories haven’t been this low in September in decades.
Inventories are America’s shock absorber. They protect us when a refinery goes down, a hurricane hits the Gulf Coast, or a pipeline fails. Heading into harvest and heating season, that cushion is thin.

War explains much of it. Drone strikes have damaged Middle East refineries and disrupted shipping through the Strait of Hormuz. Ukrainian strikes idled Russian refineries, and Russia banned diesel exports in July. China curtailed its own exports.

Buyers turned to American refiners. U.S. distillate exports ran 30 percent above their five-year average this spring. That helped supply the world. It also meant a foreign-caused shock showed up at the American pump.

A complete export ban is the wrong answer.

Refineries make gasoline, diesel, and jet fuel from the same barrel of crude. S&P Global has estimated that a full ban could force refiners to cut crude runs by about 2 million barrels a day. That means less gasoline and jet fuel, too. We would solve one problem by creating others.

A narrower approach fits the arithmetic: temporarily keep a modest share of production at home to rebuild the winter cushion.

The numbers are not enormous. Keeping 200,000 barrels a day here adds about 6 million barrels in a month. At 300,000, it is 9 million. At 400,000, it is 12 million. That is roughly 15 to 30 percent of recent exports — a refill and not an embargo. It is also a fraction of the volume a full ban would trap, so it is far less likely to push storage toward overflow.