Iowa Farmers Feel Diesel Pain as GOP Lawmakers Push Export Ban
Diesel prices have hit a record high of $6.53 a gallon, up 77% from a year ago, and Iowa's agriculture community is feeling the squeeze. Now, Republican lawmakers including Iowa's own Sen. Chuck Grassley and Rep. Ashley Hinson are calling for a ban on U.S. diesel exports to bring relief, but energy experts warn the move could backfire and push prices even higher.
Why diesel prices are crushing Iowa farmers
Diesel is the lifeblood of Iowa's agriculture, trucking, and construction sectors. Every bushel of corn and soybean moved to market depends on diesel-powered equipment, and the soaring costs are eating directly into farm income.
Grassley made the frustration clear in a Sept. 19 social media post:
With diesel $6.57 in Iowa why doesn't Pres Trump put an embargo on diesel exports like presidents in the 70s put embargoes on ag products bc food prices were inflated. High diesel prices ARE KILLING FARMERS INCOME.
Tennessee Rep. Tim Burchett, also a Republican, introduced two bills on Sept. 17. One would ban diesel exports through January 2027, and the other would trigger an export ban any time diesel hits a national average of $5 or more per gallon.
Would a diesel export ban actually lower prices?
Energy experts say no, and the reasoning comes down to how global markets work. The U.S. actually produces more diesel than it consumes, about 5.3 million barrels of distillates per day against domestic demand of about 3.6 million barrels, according to Patrick De Haan, petroleum analyst at GasBuddy.
The problem is that diesel trades on international markets. Prices have surged because of production and shipping disruptions tied to the Iran war and the Ukraine-Russia war. In July, Russia banned its own diesel exports after Ukraine attacked Russian production facilities. Russia typically produces about one in nine barrels of diesel worldwide, and that supply is now effectively off the market.
De Haan told CBS News that an export ban is very likely to backfire.
Most lawmakers think, 'Oh, hey, this sounds easy, let's just back up products in the United States,' but that doesn't put them in the place they need to be. It's just fraught with problems that haven't been thought out.
Unintended consequences for U.S. refiners
If U.S. refiners can't sell diesel overseas, they may respond by cutting production or shifting to other fuels they can legally export, like jet fuel. That would remove domestic diesel supply, the opposite of what the ban intends.
Tracy Shuchart, CEO of energy consulting firm Hilltower Resource Advisors, noted in a Sept. 15 social media post that domestic refineries would likely cut diesel output in response to an export ban. Foreign buyers would also cement new deals with non-U.S. suppliers, potentially weakening American companies in the long run.
What could actually lower diesel prices?
Instead of an export ban, experts point to other options. De Haan said the Trump administration could extend an existing waiver of the Jones Act, which requires goods shipped between U.S. ports to be carried on U.S.-built, U.S.-flagged, and U.S.-crewed vessels. That waiver expires Nov. 15.
Another option is temporarily waiving the federal renewable fuel mandate that requires refiners and retailers to sell a set amount of ethanol. De Haan said that step alone could lower fuel prices by 10 to 20 cents a gallon.
Beyond that, De Haan said the administration's most impactful move would be getting the Strait of Hormuz reopened. Before the conflict with Iran, that vital Middle East waterway carried a fifth of global oil supply.
Is there actually a diesel shortage?
De Haan said fears of U.S. diesel shortages are unfounded. While a handful of gas stations may report being out of fuel at any given time, GasBuddy real-time data shows no widespread shortages.
It's not abnormal for stations to run out of gasoline, premium, mid-grade, diesel, and there can be a lot of different reasons for that, he told CBS News. On a daily basis, there's probably somewhere in the ballpark of 0.5% to 1% of stations that may temporarily run out.
Some stations may also delay buying new diesel shipments at current high prices, hoping costs drop in the future.
What Iowa readers should watch next
For Iowa farmers and small businesses, the key dates are Nov. 15, when the Jones Act waiver expires, and any movement on the Burchett bills in Congress. The debate over export bans will likely continue as long as diesel prices stay elevated, and Iowa's congressional delegation is positioned at the center of it.