Goldman Warns Diesel Export Ban Would Send Gasoline Prices Higher
If the United States institutes a ban on diesel fuel exports, Goldman Sachs analysts estimate it would initially push prices lower. The effect, however, would only continue until storage space fills up, the bank warned. Amid reports on the possibility that Washington may suspend diesel fuel exports for a period of 90 days, the investment bank’s analysts calculated that the move, once in effect,…
Goldman Sachs analysts have warned that a ban on diesel fuel exports could lead to higher gasoline prices in the United States. The bank predicts that the initial effect of the ban would be a reduction in diesel fuel prices by around $0.25 per gallon weekly, as storage space fills up. However, once the storage capacity is reached, gasoline prices are expected to start rising, with an additional $0.30 per gallon per week.
This is because diesel, gasoline, and jet fuel are largely produced together. The diesel export ban would also have an impact on European fuel prices, as the continent is the largest importer of U.S. energy commodities. Goldman estimates the price effect in Europe at $3 per barrel of diesel, which is approximately 2% of current prices.
An emergency release of fuel inventory could reduce the impact of the price rise by about 50%. Once the diesel ban is lifted, US diesel prices are likely to re-align with global prices, including European prices, potentially putting upward pressure on US diesel prices and downward pressure on prices abroad.
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