Trump’s futile attempts to lower the price of diesel ahead of the mid-term elections

 After diesel prices hit a record high of $6.53 per gallon on 21 September, Donald Trump, ahead of the mid-term elections on 3 November, promised that diesel prices would fall “by record amounts and quickly”. The US President has played all his cards: he eased sanctions on Russia by striking a deal on diesel with Vladimir Putin; he threatened G7 allies to persuade them to release 100 million barrels of stockpiles over four months – with a substantial proportion of diesel in the first twenty days – before continuing to draw on US strategic reserves and even promising billions to farmers. Diesel prices, however, after a brief respite in early October, have begun to rise again.

According to new data from the Energy Information Administration, published yesterday, the average price at the pump has risen by 7.6 cents in a week: a gallon of diesel now costs $6.35, 70 per cent more than a year ago. Furthermore, according to the Bureau of Labour Statistics, producer prices for road freight transport in September rose by 19.3 per cent compared with the previous year, whilst inflation stands at 3.7 per cent.

To reverse the trend, Trump has really tried everything. After ‘persuading’ the G7 on 2 October to release stockpiles, on 9 October the US Treasury, following a phone call between Putin and Trump, authorised the purchase of Russian diesel – banned from 2022 – for a period of six months: the US president announced that Russia would immediately export 300,000 tonnes of diesel to international markets. However, the first direct shipment to the United States – comprising 40,000 tonnes of diesel – is due to arrive on 7 November, four days after the mid-term elections. Regarding the agreement with Moscow, as early as two weeks ago, in its monthly report of 14 October, the International Energy Agency had stated that the easing of restrictions on Russian diesel exports was unlikely to substantially alter the market balance. So far, the agreement has prompted only a slight market reaction following the announcement, apart from the ramp-up in Russian production to meet quotas, as reported by Reuters, and the opportunity to sell barrels at full price, bringing more revenue into the Kremlin’s coffers whilst the war with Ukraine continues.

On 19 October, however, during a Republican rally in Kansas for Senator Roger Marshall, whose re-election is hanging in the balance, Trump promised farmers $8 billion in subsidies to cover part of the rise in diesel prices during the harvest months, but these too will only be paid out after the election. A few weeks earlier, on 5 October, during a rally in Nebraska, Trump signed a federal order to allow ‘red diesel’ – intended for agricultural use (dyed to indicate exemption from federal excise duty) – to be used on public roads; however, the order did not add a single extra barrel to the market, pitted lorry drivers against farmers for the same fuel, and did not abolish the excise duty. On 21 October, the US Department of Energy also authorised a loan of 315,000 barrels from the North-East’s diesel reserves.

There are at least two paradoxical aspects: the first is that the result of all these measures was merely a slight fall in prices for two weeks, when diesel dropped to $6.18 per gallon on 12 October, whilst it has now risen back to around $6.35. The second is that the root of all Trump’s diesel-related woes lies precisely in Trump’s own decisions: the predominant factor is the war with Iran, and the White House’s actions have little impact on this. Since late February, oil flows have been disrupted, refineries in the Middle East have been damaged, whilst American facilities – the US is the leading net exporter of diesel – are already operating at full capacity.

Blaming Ukraine and the attacks on Russian energy infrastructure, as the Trump administration has done, is merely an attempt to find a scapegoat, when in fact the greatest responsibility lies at home. At the White House, to be precise.