Key Points

  • U.S. diesel prices at the pump have surged 83% in 2026, and hit an all-time high on Sept. 22.

  • Republican politicians, including President Donald Trump, have voiced support for a temporary ban on diesel exports from the U.S.

  • The soaring price of diesel is not related to any domestic supply issues, as the U.S. refines far more of the fuel than the country needs.

  • 10 stocks we like better than Vanguard World Fund - Vanguard Energy ETF ›

It often seems like Americans can't agree on anything these days, but most people would likely agree that fuel prices are too high. Sharply higher oil prices due to the Iran war's supply disruptions are causing everyone pain at the gas pump. But beyond the Iran war's impact on the price of regular gasoline, this aspect of "Trumpflation" is also driving up the price of another important fuel: diesel.

Most Americans don't buy diesel directly, but its cost affects the price of almost everything that we do buy. Diesel-fueled trucks carry huge volumes of products from factories and farms to our store shelves, and a large majority of farm equipment runs on diesel, too. Diesel prices have increased by 83% in 2026, according to CNN. And on Sept. 22, according to AAA data, the price of diesel reached its highest-ever recorded average price nationwide: $6.5276 per gallon.

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With the midterm elections coming up in November, politicians are getting nervous about this growing fuel affordability crisis. The idea of a diesel export ban has suddenly become a hot topic in Washington. Republican senators and representatives from states like Iowa and Tennessee have proposed a temporary ban on diesel exports in the hope of reducing fuel costs for farmers and truck drivers.

Supporters of the export ban believe that keeping all the fuel the country produces within our borders could drive down diesel prices here at home. President Donald Trump told reporters on Tuesday that he was open to the idea: "I've said let's not send out the diesel."

As of this writing, it's not clear if Trump will actually impose an export ban. But would such a move really work to lower prices on fuel in the U.S.? Maybe not.

In fact, there are a few reasons why a ban on diesel fuel exports would be bad news for the U.S. economy, and it could be particularly painful for investors in energy stocks.

Why America exports diesel

The idea of banning U.S. oil or fuel exports is politically sensitive -- but it's not new. Prior to 2015, a ban on crude oil exports from the U.S. had been in place for decades -- a policy instituted in response to the economic crisis that was caused by the 1973 Arab oil embargo.

But in the modern day, America produces more than enough diesel fuel to meet our domestic needs. Currently, U.S. oil refineries produce about 5.3 million barrels per day of distillate fuel (a category that includes diesel for engines and fuel oil for heating), and domestic demand for diesel is about 3.6 million barrels per day. So the high diesel prices that folks are seeing at the pump are not the result of any lack of supply in the U.S. -- America refines more diesel than we need.

In fact, America is one of the world's leading exporters of diesel, exporting about 1.5 million barrels per day. That's about 20% of the total volume sold on international markets.

What would happen if Trump bans diesel exports

In the short run, a diesel export ban might succeed in driving down fuel prices in America. According to Bloomberg analysis, U.S. producers would suddenly have a glut of diesel fuel that they were no longer allowed to sell internationally. This could cause diesel prices in some parts of America to drop, at least in the short term. However, other regions of the U.S. wouldn't see much relief because of variations in how diesel fuel gets refined, shipped, and sold in different regions of the country.

But in the long run, the consequences could be complex and costly. According to the American Fuel & Petrochemical Manufacturers (AFPM), an energy industry trade group, a diesel export ban would hurt America's energy industry. This would likely drive up diesel prices for Americans into the future.

A recent statement from the AFPM said that a diesel export ban would force U.S. refiners to cut their production of diesel, which could also lead to lower production of gasoline -- and result in higher prices at the pump for everyone. A diesel export ban would also likely lead to retaliation by other countries that sell oil and gas to the U.S., driving up the cost of the fuel that America imports.

And for reasons of logistics, this country does import fuel, despite producing a surplus domestically. As the AFPM noted in a blog post recently: "Many parts of the United States rely on imported gasoline and diesel because fuel produced in the U.S. cannot always be moved economically from where it is produced to where it is needed."

Finally, a moratorium on diesel exports would also intensify trade war strife with America's trading partners, which could ultimately backfire in ways that politicians can't predict or control.

Why this energy stock ETF just got riskier

The Vanguard Energy ETF (NYSEMKT: VDE) is a popular, low-cost vehicle for investing in the energy sector. Its stock holdings include an array of companies involved in the exploration, extraction, and refining of oil, natural gas, and coal. About 13.7% of the Vanguard Energy ETF holdings are in refiners. Those companies' businesses would be vulnerable to a diesel export ban.

There's another reason why investing in energy stocks now could be risky. The Vanguard Energy ETF has had a big run-up in price during the past year, bringing its one-year total return to about 41%. But the biggest gains might already have been made.

I don't think a diesel export ban will happen, because too many powerful politicians from oil-producing states don't want one to happen. Also, it apparently would not meaningfully reduce fuel costs in the U.S. for long.

However, just the fact that a diesel export ban is being discussed might be bad news for the Vanguard Energy ETF. When the president of the United States starts proposing policy changes that are not in the energy industry's long-term best interests, that's a warning sign for energy investors.

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Ben Gran has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.