Energy Secretary Wright says Europe can help ease tight supply

Washington demands France, Germany tap strategic stockpiles

Export ban floated as midterms loom and farm-belt anger grows

Diesel prices are displayed at a gas station in Encinitas, California, on Thursday. Diesel, a fuel widely used by working-class Americans, has seen a sharp rise in price. [Reuters]
Diesel prices are displayed at a gas station in Encinitas, California, on Thursday. Diesel, a fuel widely used by working-class Americans, has seen a sharp rise in price. [Reuters]

With diesel prices surging in the wake of the Iran and Ukraine wars, the United States has publicly pressed Europe to release strategic stockpiles onto the market. The Trump administration is pulling out all the stops to boost supply — including weighing a ban on US diesel exports — as rising fuel costs stoke voter anger ahead of the midterm elections.

US Energy Secretary Chris Wright confirmed Thursday (local time) that Washington has been asking Europe to release strategic reserves. "Of course," Wright told Fox News when asked whether such requests had been made.

Wright said Europe had been sitting on large diesel stockpiles precisely because it had moved much of its refining capacity outside the continent. "Europe has been concerned about supply because they've moved a lot of their refining capacity off the continent, and as a result they've built up enormous diesel reserves," he said. "We are recovering global diesel exports, but the market right now is very tight."

He added that American refineries were running at maximum capacity. "Europe can help improve this situation, and I'm confident they will," Wright said.

Wright particularly stressed the need to release European stockpiles ahead of winter. "It's time to coordinate the release of diesel reserves to coincide with the harvest season and the start of winter heating oil demand," he said. "Now is the time to put more diesel into the market. Diesel is available, and I think positive news will come soon."

The US has already been pressing major European nations directly. According to Reuters, the Trump administration has demanded that France and Germany release their diesel stockpiles, and has warned that it could restrict US diesel exports if Europe refuses to comply.

The political pressure driving Washington's push is rooted in a sharp domestic price spike. Voter frustration over rising fuel costs has been especially pronounced in agricultural regions, where diesel consumption is high, and some Republicans have begun calling for an outright ban on US diesel exports.

Donald Trump is also considering such a ban. Wright said the president "wants to lower energy prices and is open to every idea to achieve that."

However, Wright stopped short of saying he personally supports an export ban when asked directly. "Everything depends on the circumstances," he said. "We will work with Europe to find a way to bring prices down significantly through a more constructive approach to expanding supply."

Ukraine's strikes on Russian oil refineries have also contributed to the supply crunch. "Russia was a major diesel exporter and exported some gasoline as well, but now it is importing both products," Wright said. "That has been a big factor tightening the refined-products market."

With supply disruptions from the Iran war compounding a decline in Russian refining capacity, global diesel markets have grown increasingly strained. Whether Europe agrees to release its stockpiles has emerged as a key variable in any near-term price stabilization.


sjy@heraldcorp.com