Valero, Marathon, Phillips 66 Back AFPM Drive to Block Diesel Export Ban as S&P Global Projects 12% Run Cut

A coalition of more than 30 American business, energy, and manufacturing groups sent a letter to President Trump on Monday urging him to reject proposed restrictions on US fuel exports. The American Fuel and Petrochemical Manufacturers led the effort and published supporting analysis on the same day. Their core argument: export limits would produce the opposite of their intended effect, cutting refinery throughput and reducing the domestic diesel supply the policy aims to protect. The letter arrived as the White House weighs a potential export ban to address diesel prices that averaged $6.529 per gallon nationally as of September 21, per the EIA weekly retail price survey.

The Export Paradox: A 12% Run Cut Would Erase the US Diesel Surplus

American refineries currently produce far more diesel than the domestic market consumes. Data from the week ending September 19 shows US refineries outputting more than 5 million barrels per day of diesel while domestic demand ran at approximately 4 million barrels per day. That roughly 1-million-barrel-per-day surplus flows through export terminals, primarily along the Gulf Coast, and provides the revenue base that justifies high utilization rates.

A ban would not redirect that surplus to US consumers. According to S&P Global analysis cited by AFPM, restricting exports would force refiners to cut overall utilization by nearly 2 million barrels per day, a reduction of approximately 12%. With throughput reduced by 12%, diesel output would fall from 5 million bpd to approximately 4.3 million bpd. The US surplus over domestic consumption would shrink from 1 million bpd to roughly 300,000 bpd, eliminating the buffer against demand spikes or further supply disruptions.

AFPM President and CEO Chet Thompson stated Monday that export restrictions would mean the cost savings consumers stand to gain could be "severely and irreparably undercut if the federal government chooses to restrict fuel exports." Thompson made the remarks in a formal statement released alongside the coalition letter. American refineries were running at approximately 95% utilization as of mid-September, per AFPM data, and global refining capacity has contracted more than 10% from damage to Middle East and Russian facilities.

Refiners at Risk: Subsidiary Structures Behind the Coalition

Valero Energy, the largest independent US refiner by capacity, operates Gulf Coast and mid-continent facilities and ships distillates to European and Latin American buyers. Marathon Petroleum runs the country's second-largest refining network and controls the MPLX LP midstream partnership, which handles transport and terminal volumes tied directly to export flows. Phillips 66 was spun from ConocoPhillips in May 2012 and now holds significant Gulf Coast terminal exposure alongside coast-to-coast refinery assets. HF Sinclair covers Rocky Mountain and mid-continent operations and would face similar throughput economics under a ban.

These refiners hold a structural cost advantage over European competitors that makes export economics central to their business case for high utilization. Oil Authority's earlier coverage of the export ban proposal reported that Gulf Coast refiners captured roughly $6 million to $6.5 million per 500,000-barrel cargo in freight savings. That advantage arose as Hormuz disruptions drove very large crude carrier rates to a record $1.27 million per day as of September 24. Removing export revenue would compress the margin underpinning those utilization levels and prompt refiners to reduce runs.

Regional Exposure and Compliance Cost Complications

AFPM identified the US Northeast and West Coast as the regions most exposed to the second-order effects of export restrictions. Both regions import refined products because local refinery capacity cannot meet demand. Reduced Gulf Coast throughput would lower the product volumes moving up the East Coast pipeline system or through the Panama Canal to West Coast terminals.

The coalition letter also cited Renewable Fuel Standard compliance costs, which AFPM said have added as much as 40 cents per gallon to supply costs this year. Export revenue offsets part of that fixed compliance burden across total refinery production. Removing that revenue source would push the cost allocated to each barrel of domestically sold diesel higher, not lower. The export ban would therefore be self-defeating on its stated objective of lowering consumer prices.

Monday Settlement Prices and Market Context

WTI crude settled at $92.60 per barrel on Monday's CME close, up 0.21% on the day, per OilPrice.com. Brent crude settled at $106.07 per barrel on ICE, a gain of 1.68%, per OilPrice.com, widening the Brent-WTI differential to $13.47 per barrel. That spread is wider than the $11.93 gap reported in recent settlement coverage, compounding the netback disadvantage already facing Canadian heavy crude producers. US NYMEX RBOB gasoline futures fell 1.88% to $3.3296 per gallon on Monday, per Trading Economics, as downstream markets reacted to policy uncertainty around export restrictions.