Forty days before the midterm elections, the Trump administration’s first move is deregulation.

Since July 30, the U.S. Environmental Protection Agency (EPA) has relaxed gasoline specifications at least three times—the most recent being on September 8. This series of actions is especially urgent now: the national average retail price of diesel has reached $6.53 per gallon—the highest on record—and only forty days remain before the November 3 midterm elections. On September 22, on the sidelines of the United Nations General Assembly, Trump stated he had instructed his team to study halting diesel exports; the next day, Energy Secretary Chris Wright told The Wall Street Journal the administration was considering limited restrictions—not a blanket ban—to “avoid swinging a heavy-handed government policy hammer.” In the House of Representatives, Republicans hold a narrow majority of 218 seats to Democrats’ 214. Where are these prices coming from? The Iran war broke out on February 28. In the week prior, the U.S. national average retail gasoline price stood at $2.94 per gallon and diesel at $3.81. According to weekly data from the U.S. Energy Information Administration (EIA), by the week ending September 21, gasoline had risen to $4.48 and diesel to $6.53. Diesel has now surpassed its previous record high of $5.81 set in June 2022; gasoline remains about 50 cents short of its 2022 peak of $5.01. According to CNBC’s September 23 report citing shipping data firm Kpler, crude oil throughput through the Strait of Hormuz for the week ending September 20 stood at 6.98 million barrels per day—less than 40% of the pre-war level of 18.3 million bpd. Diesel prices have surged more sharply than gasoline for another external reason: Russia, following Ukrainian strikes on its refineries, has banned diesel exports—removing the world’s second-largest diesel supplier from the global market. This is a supply shock originating externally. What the EPA did first The government’s initial response was to increase available fuel supply. On July 30, the EPA authorized nationwide production of a single gasoline pool with ethanol content ranging from 9% to 15%. On August 20, it temporarily raised the national ethanol blending limit for gasoline from 10% to 15% and waived volatility standards. On September 8, it suspended federal enforcement of special gasoline specifications for Texas, Arizona, and California. These measures are justified—and the rationale lies in EIA data. When supply is being stripped away by Strait-of-Hormuz disruptions and Russian export bans, options that enable more usable fuel to be derived from each barrel of crude, or allow fuel to flow more freely across state lines, are among the few interventions unlikely to create new shortages elsewhere. They require no fiscal expenditure and do not distort market flows. Mike Sommers, President of the American Petroleum Institute, put it plainly: “The answer is more supply and greater flexibility—not new restrictions.” What the White House is weighing Discussions around export restrictions have real grounding in data. EIA data shows that since August, U.S. distillate fuel exports (of which diesel constitutes the bulk) have averaged about 1.65 million barrels per day—up from roughly 1.34 million bpd a year earlier. As of the week ending September 18, end-of-period inventories stood at 107.4 million barrels, compared to an average of about 118.3 million barrels during August–September last year. In mid-September, Tennessee Republican Representative Tim Burchett introduced two bills. One—H.R. 10422—would trigger export controls only when the national average retail diesel price reaches $5.00 per gallon, automatically lifting them once the price falls below $4.50 and stays there for 30 consecutive days.

Diesel prices approach the $6.50 record level; the White House weighs suspending federal fuel taxes and lifting restrictions on ‘red diesel,’ while export bans remain under evaluation.

U.S. diesel prices remain persistently high, prompting the Trump administration to weigh multiple intervention options—including suspending the federal fuel tax, relaxing regulations on ‘red diesel,’ and potentially imposing export restrictions. Yet, as of now, no policy decision is imminent; internal deliberations continue. According to Bloomberg, discussions involve key officials including Vice President JD Vance, Energy Secretary Chris Wright, Interior Secretary Doug Burgum, and Treasury Secretary Scott Bessent. Vance has explicitly urged action to curb rising diesel prices and proactively asked what policy tools are available. Meanwhile, Wright revealed the administration is negotiating with refiners to secure voluntary export reductions—rather than imposing mandatory export bans—to avoid triggering industry backlash against direct administrative intervention. These developments have already sent clear signals to markets. Following Trump’s public remarks supporting diesel export restrictions this week, fuel futures experienced sharp volatility. Some refiners have begun inserting protective clauses into contracts to hedge against potential non-performance risks should export bans be enacted. Key U.S. allies—including European nations—have also voiced deep concern over possible loss of U.S. diesel supplies, warning such a move would further strain global fuel markets already under tight supply conditions. Pump prices near historic highs prompt early state-level action U.S. retail diesel prices currently hover near $6.50 per gallon—approaching the all-time record. Under mounting pressure, several Republican governors have taken unilateral action ahead of any federal decision. Louisiana Governor Jeff Landry declared a state of emergency early this week, suspending penalties for farmers and loggers using off-road diesel on public roads—effective through the end of October. “We will not stand idly by while Louisiana farmers harvest their crops at record-high prices,” Landry stated in his announcement. Alabama Governor Kay Ivey followed suit, directing state law enforcement agencies to suspend enforcement of red-diesel restrictions for four months. Nebraska Governor Jim Pillen signed an executive order permitting registered highway vehicles to use off-road diesel without penalty and announced diesel tax rebates for vehicles transporting livestock and agricultural products.

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