Diesel averaged about $6.28 a gallon on Friday, up from roughly $3.68 a year ago. That evening, President Trump announced his fix: a deal with Vladimir Putin for Russia to ship diesel to the U.S. and world markets, reversing years of U.S. sanctions on Russian fuel.
Energy experts say it probably won’t do much for prices at the pump. It will help Russia.
What is the Trump-Putin diesel deal?
After a 90-minute call with Putin, Trump posted that Russia “will immediately supply over 300,000 tons of diesel fuel to the American and global marketplace, another 500,000 tons during the month of November, and 1,000,000 tons immediately thereafter,” with another 3 million tons later, Al Jazeera reported. The Treasury Department issued a temporary license allowing Russian diesel onto the global market despite sanctions. The Kremlin said Russia was ready “to supply oil and oil products to the American and world markets,” and noted Trump wished Putin a happy birthday.
Will Russian diesel lower prices?
Not by much, experts told the Associated Press. “It’s kind of shuffling deck chairs on the Titanic,” said Michael Lynch of the Energy Policy Research Foundation. Russian diesel sent here is diesel Russia’s other customers won’t get, so global prices stay about the same. “The best you could hope for is a tiny dip in prices locally in places like the New York-New Jersey area, Philadelphia maybe,” he said.
The bigger problem is the war with Iran. Tehran has largely closed the Strait of Hormuz since U.S. and Israeli strikes began in February, cutting off a big share of the world’s refined fuel. “Refined products like diesel are still barely half of prewar levels,” said Daniel Sternoff of Columbia University’s Center on Global Energy Policy. Diesel hit a record $6.53 on Sept. 22, according to AAA, and it drives up the cost of nearly everything trucks deliver, especially groceries.
Who benefits from the diesel deal?
Moscow, mainly. Clayton Seigle of the Center for Strategic and International Studies said Russia needs to unload summer-grade diesel before winter, and the deal “does certainly let Moscow off the hook in terms of revenue squeeze.” Ukraine called it a gift to Putin, Axios reported. Ukrainian drone strikes have knocked out a large share of Russia’s refining, and European countries may refuse to buy Russian fuel at all.
The BeezLoop Take
Truckers, farmers and families paying more for groceries need relief, and it’s fair to want the government to try everything. But this deal looks like politics first: announced less than a month before the midterms, likely to change prices by pennies, and paid for by easing pressure on a country that bombed a Ukrainian apartment building full of children two days earlier.
The real driver of $6 diesel is a war with Iran that’s now eight months old and that most Americans say hasn’t been worth it. A deal with Putin doesn’t fix that. It just changes who profits from it.
The open question: if diesel prices don’t come down by Election Day, what will the White House try next?
Also on BeezLoop: a Russian missile killed three 1-year-olds in Ukraine this week, and Americans owe $1.26 trillion on credit cards as prices squeeze families.
Sources: Al Jazeera · Al Jazeera explainer · Associated Press via Fortune · Axios · Associated Press (video)
[…] on BeezLoop: Trump struck a diesel deal with Putin as the Iran war keeps fuel prices high, and Iran offered to reopen Hormuz and Trump said […]