Commentary: A diesel export ban is a bad idea. Trump needs it anyway

RAMIFICATIONS OF A DIESEL BAN

Nothing comes for free, though, and the ramifications of a ban would be pernicious and lasting.

News alert: Oil refiners are commercial entities that like to make money. If diesel margins collapse, refiners will find ways to produce less of it.

One way is to alter their intake of different grades of crude oil and proportions of the fuels that come out of them: More gasoline and jet fuel rather than diesel, say.

Or they could simply dial back production altogether. Having run unusually hard this summer, chasing those margins, a ban might herald a bout of maintenance shutdowns. Trump could, in theory, invoke emergency powers to force refineries to run, but at the risk of even deeper damage to his ties to the industry.

So after the initial rush of diesel prices dropping at the stroke of a pen, diesel production would start falling to rebalance things and support those prices, as is the usual way with any traded commodity.

Other forces would be set in motion, too. The ban would create a two-tier market with depressed prices inside the US but soaring prices elsewhere now that critical US barrels were unavailable. Even as American refiners took a hit to profits, European and Asian ones would get a further windfall as margins blew out.

That would blow back on the US in the form of higher imported inflation, since diesel is the fuel of commerce, and a possible recession in export markets succumbing to even higher energy costs.