Trump pushed diesel to record highs — and now has no good options to bring prices down

G7 nations, bowing to US pressure, agreed through the International Energy Agency to jointly release 100 million barrels of strategic diesel and crude reserves over four months. After the G7 statement, Trump welcomed the announcement on social media, writing that "Europe has agreed to release massive amounts of stored diesel. The process will begin immediately."

Analysts warn, however, that even this coordinated release will do little to tame the recent surge in diesel prices. The fundamental cause of the spike — a supply crunch stemming from the war with Iran — remains unresolved and cannot be fixed quickly. Inside the administration, options ranging from export bans to fuel-tax cuts have been weighed, but each carries significant drawbacks.

Trump returned to the White House on a campaign pledge to lower the cost of living. But the average gasoline price, which stood at $3 per gallon when his second term began, has since climbed past $4, with some states such as California approaching $6.

The pressure has intensified as diesel crossed $6 per gallon for the first time in history. Because diesel powers trucks, farm equipment, trains and construction machinery, price increases tend to ripple through the costs of goods and services across the economy. The national average has reached $6.38 per gallon, up sharply from $3.70 a year ago.

Trump has pointed to Ukrainian strikes on Russian oil refineries as the cause of rising diesel prices. Bloomberg, however, identified the war with Iran as the bigger driver of global fuel markets, noting that the transport of crude and refined petroleum products through the Middle East has been disrupted for months.

Unless Trump can broker a deal to reopen the Strait of Hormuz, his tools for lowering gasoline and diesel prices are limited. He has suggested that a deal to end the Iran war may not be possible until after the midterm elections — meaning high fuel prices could persist for weeks or even months, increasing pressure on the administration to find other solutions.

Some Republican lawmakers proposed restricting US diesel exports. Trump initially responded positively but later acknowledged the effect would be very limited. While a full or partial export ban could provide short-term price relief, it would likely backfire: the US produces more diesel than it consumes, and if refiners cut output after losing overseas markets, global supply would shrink and world prices could rise further.

A fuel-tax holiday faces similar obstacles. The federal government levies 18.4 cents per gallon on gasoline and 24.4 cents on diesel. Trump said in May he would temporarily suspend the gasoline tax "until the right moment," but no action followed.

Oil industry executives have recently pushed for a diesel-tax suspension instead of an export ban. But suspending the tax requires congressional approval, and with Congress in recess ahead of the midterms, passage before the election is in effect impossible. Fiscal concerns add to the difficulty: the Bipartisan Policy Center estimated that suspending the federal gasoline tax would cost tens of billions of dollars in lost revenue each month, widening the deficit further.

The Trump administration has already deployed a range of measures. In March, it ordered the release of 172 million barrels from the Strategic Petroleum Reserve as part of a coordinated international effort to curb the price spike triggered by the Iran war. When the planned release concluded, SPR stockpiles fell to about 244 million barrels — roughly one-third of total storage capacity and the lowest level since the 1980s.

That same month, the administration temporarily waived the Jones Act, a law in place for more than a century. Enacted in 1920 to protect the US shipbuilding industry, the law requires that cargo transported between US ports be carried on American-built, American-owned and American-flagged vessels. The waiver allowed cheaper foreign oil tankers to be used, boosting domestic long-haul maritime shipments. According to the Energy Information Administration, Gulf Coast suppliers shipped nearly twice as much crude and petroleum products to the West Coast in the first seven months of this year as they did in all of last year.

The Environmental Protection Agency also moved up the permitted sale date for winter-blend gasoline. The administration said the measure could add hundreds of thousands of barrels per day to gasoline supply. Renewable fuel blending mandates, however, remain a politically sensitive issue, as they pit the interests of the agricultural sector against those of the oil industry — both core constituencies.

Energy Secretary Chris Wright said US refineries are running at maximum capacity and that the administration is considering invoking the Defense Production Act to expand refining capacity further. The law grants the president emergency authority to direct domestic industries to prioritize resources for national security purposes; invoking it would allow federal funds to be channeled into building new refineries or restarting idled ones. Significantly expanding capacity would take considerable time, however, and oil companies have said they need guaranteed returns over several years before committing to new investment.

Trump has argued that a deal securing majority control over more than 65 billion barrels of Venezuelan oil reserves would increase US supply and "substantially lower gasoline prices for all Americans." Analysts, however, said meaningfully raising Venezuelan output would take years.

Ultimately, analysts say, there is little prospect of significantly reducing fuel costs for American consumers in the short term without ending the war with Iran.