Banning Gasoline Exports Will Harm U.S. Energy Security

Predictably, initiatives to restrict U.S. oil exports are making the rounds, including Representative Ro Khanna (D-CA)’s Gasoline Export Ban Act. And although U.S. Energy Secretary Chris Wright has said the Trump administration “has no plan” to restrict exports, many observers believe export controls could indeed come under consideration should fuel prices resume their ascent.

The political temptation to slash U.S. oil exports amid high fuel prices is understandable, but likely to backfire in practice. Whether imposed on crude oil, refined products, or both, export controls would not bring sustained fuel price relief. Instead, they could unleash a set of structural and geopolitical problems that could make the underlying energy affordability situation worse. The following analysis contemplates a gasoline-only export ban, from which the best-case outcome is a modest, short-term, regionally concentrated price reduction, followed by higher prices as fuel manufacturers respond to upended market dynamics.

Where and How Much Could Export Controls Reduce Prices?

Export controls are predicated on an assumption that supplies destined for international markets can be successfully redirected to domestic consumers. But this redirect capability is constrained by U.S. refinery configuration and intraregional transportation channels. The U.S. Gulf Coast holds the greatest regional concentration (55 percent) of U.S. refining capacity and is the origin of virtually all of U.S. gasoline exports. If gasoline exports were banned or throttled, an overhang of gasoline would quickly develop on the Gulf Coast, plunging local gasoline prices. If that were the end of the story, then Gulf Coast consumers would enjoy much lower gasoline prices than before the ban. But sustaining the Gulf Coast gasoline glut—let alone redistributing it to other regions—is not feasible.

Cut off from their international customers and facing a Gulf Coast supply overhang, refiners would, of course, redirect as much supply as possible to other regions, such as the U.S. East Coast. But with refined product pipelines connecting those regions already operating at full capacity, it would fall to seaborne tanker vessels to ship incremental cargoes between regions. Recent waivers of Jones Act (JA) regulations have helped make additional shipping capacity available between U.S. ports, but limited global tanker capacity (non-JA-qualified) would constrain the volume of Gulf Coast gasoline that could move between regions. As such, the gasoline overhang would persist, keeping prices low and compressing the Gulf Coast gasoline “crack spread”—which is the differential between a refiner’s gasoline sale price and its crude feedstock price.

Faced with unprofitable (likely loss-making) operations, Gulf Coast refiners would invariably slash refining activity, processing less crude than before and delivering reduced volumes of refined products. And refiners would also modify their “diet” to skew output away from gasoline and toward other, more profitable fuels like diesel, causing gasoline prices to at least pare losses, if not stage an outright rebound.

The results for security of oil supply would be unfavorable for U.S interests: reduced refinery throughput and crude supply, less domestic gasoline supply than would exist without the ban, partially or fully offsetting the initial inventory build and putting upward pressure on the very price the ban was meant to suppress.

The Khanna bill’s exclusion of diesel from the export ban exacerbates the problem by leaving diesel fully accessible to global markets and thus giving refiners a clear financial incentive to shift their slate away from price-suppressed gasoline.

Figure 2 illustrates this predictable transmission pathway from policy to prices—from ban imposition through crack spread compression, run cuts, supply tightening, and ultimate price recovery.

Could the White House Preempt Refiner Adjustment?

The obvious follow-on question is whether the administration has legal tools to interdict the refiner behavioral response that is likely to offset the policy’s gains.

The Federal Energy Regulatory Commission’s authority to mandate electricity generation dispatch under emergency conditions has no petroleum equivalent. The Emergency Petroleum Allocation Act of 1973, which gave the executive sweeping price control and allocation authority over petroleum, expired after decontrol in the early 1980s. Reviving equivalent authority would require new legislation not under active consideration.

One existing authority could be the Defense Production Act (DPA), Title I, which gives the president broad power to allocate materials and require production prioritization for national defense purposes. DPA Section 101 authorizes priority ratings and allocation orders that can compel a private firm to accept and perform contracts ahead of other customers. Section 708 authorizes voluntary agreements among competitors with antitrust immunity. The Biden administration invoked the DPA in May 2022 specifically in the context of energy, but for the limited purpose of requiring refiners to provide information on capacity and output, not mandating throughput levels.

Mandating a private refiner to maintain a specific throughput rate against its economic interest goes well beyond prior DPA use. It could potentially constitute seizure of private property for public use under the Fifth Amendment, triggering compensation requirements (and immediate litigation). Refiners could also invoke operational considerations, such as the quality of available feedstock, unit uptime, maintenance schedules, and safety constraints, to implement run cuts even amid a throughput mandate.

A more legally defensible, if still aggressive, approach would be to combine the export ban with DPA allocation orders directing finished gasoline to specific domestic markets, controlling distribution rather than mandating production volume. But distribution edicts cannot overcome the pipeline and shipping that limit oil and product flows between U.S. regions.

The executive intervention toolkit thus includes information requirements and voluntary coordination under DPA Section 708, distribution allocation orders of limited scope, and political jawboning. None of these tools can prevent the predictable margin-driven run cuts and product-slate shifts that undermine the ban’s price objective.

Geopolitical Costs

Export restrictions carry significant costs beyond domestic market mechanics. Europe, Japan, South Korea, and other allies depend on U.S. crude and product exports as a strategic buffer against Middle Eastern and Russian supply disruptions. Curtailing that flow during active geopolitical stress would force allied buyers into tighter global markets, raise prices in import-dependent economies already absorbing significant energy inflation, and strain alliance relationships at a moment when U.S. credibility as a reliable supplier is a tangible diplomatic asset.

Clayton Seigle is a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies and holds the James R. Schlesinger Chair in Energy and Geopolitics.