Bloomberg Surveillance Sep 21, 2026
With Bob McNally, President of Rapidan Energy Group
Rapidan Energy Group has carried a 35% probability of US fuel export restrictions since April, and Bob McNally said the number goes higher if pump prices do not cap out in the next few weeks.
The political appeal of banning diesel exports is a cheaper pump price before the midterms. McNally said the Northeast and the West Coast buy their diesel off imports, so a ban would leave those prices flat at best and probably higher, while Texas and Louisiana got the cut.
"So you would get a short-term abrupt collapse in pump prices for diesel in Texas, Louisiana, sort of the mid-continent area. On the coast, I don't think they fall much. They probably go higher."
McNally, president of Rapidan Energy Group, on Bloomberg Surveillance, founded the firm after advising the George W. Bush White House on energy policy, and his shop has been publishing a number on this exact policy since the spring.
The full segment is covered here so you can skip it.
Here are the 4 predictions that matter.
Key Takeaways
A diesel export ban would cut prices in Texas and Louisiana and raise them on both coasts
The Northeast and the West Coast price their diesel off imports, so cutting exports does not help them
The collapse would be measured in weeks, and then refiners cut runs and prices go back up
Rapidan has had a 35% probability on export restrictions since April, with upside risk if prices do not cap out soon
McNally knows of no economist inside or outside the administration who thinks a ban is a good idea
The risk he names is a president in desperation buying a few weeks of lower pump prices before the midterms
A ban makes gasoline worse, not better — refiners drop runs, so they make less of both fuels
Refiners would use the shutdown for maintenance they have been deferring while margins are this good
The scramble would land in Rotterdam and Asia, where diesel and jet would have to be found
1. Inland Down, Coasts Up
Jonathan Ferro set the segment up with the price: diesel at $6.50 a gallon stateside and possibly higher into the midterms, which he said is rattling Washington. He cited Republican Senator Chuck Grassley calling for a diesel embargo, then asked McNally what would actually happen if the US went through with a ban.
McNally started outside the country.
Diesel abroad goes straight up
Prices for diesel abroad would skyrocket.
Bob McNally
Then he explained why two-thirds of the US coastline would follow it up rather than down: the Northeast and the West Coast do not buy from the Gulf refiners, they buy from the same import market that would be repricing.
The volume that would have to find a home
You'd have to clear 3 million barrels a day if it's all products, you know, 1.8 or 1.6 of diesel.
Bob McNally
Where the price actually falls, and for how long
So you would get a short-term abrupt collapse in pump prices for diesel in Texas, Louisiana, sort of the mid-continent area. On the coast, I don't think they fall much. They probably go higher.
Bob McNally
The collapse is not permanent either. For a while, measured in weeks, prices in the mid-continent would fall hard, he said, and then refiners would reduce runs and prices would rise again.
2. A Generation Of Damage
Ferro started a follow-up question with three words, "And the U.S.", and McNally finished it for him without waiting.
The cost he ranks above the price effect
Would shatter its reputation as a safe place to invest for a generation.
Bob McNally
That is the argument for the policy failing on its own terms: the fuel price falls in one region for a few weeks, and the standing of the country as a place to put capital takes the hit.
3. Rapidan Puts It At 35%
Annmarie Hordern pointed out that the midterms are under two months away and that Senate Majority Leader John Thune has said he is open to export restrictions, so this may genuinely be on the table. McNally said his firm has been pricing it for months.
The house number, unchanged since April
Right, Anne-Marie. Well, Rapidan has had a 35 percent probability on export restrictions since April.
Bob McNally
The debate itself is not new — it ran hot when the war started, went quiet over the summer and has come back. What has not changed is the professional view of it.
Nobody advising the administration thinks it works
But I don't know of an economist inside the administration, outside the administration, who thinks it would be a good idea.
Bob McNally
He said the same of policy advisers inside the White House, and then named the one path by which it happens anyway.
The risk is political desperation, not analysis
The risk is the president, in desperation, may choose it to get that short-term few weeks of a lower pump price. Maybe it moves the Texas Senate race. Maybe it moves Michigan. That is the risk.
Bob McNally
And the number has upside from here
And if we can't sort of get a cap in prices here in the next few weeks, I think the risk is that 35% will go higher.
Bob McNally
4. Refiners Simply Stop
Hordern asked the obvious second-order question: if diesel prices drop, would refiners not just shift the barrel into gasoline instead? Lisa Abramowicz added the other half of it — does he expect gasoline prices to rise? McNally said the premise does not hold, because refiners would not keep running at the same rate.
A quarter of US diesel output goes abroad, and it goes away
Well, I think if diesel exports are banned, refiners will drop runs. They export about 25% of their diesel output. That'll all go away, and they will drop runs.
Bob McNally
Lower runs mean less gasoline as well as less diesel, he said, and gasoline stocks are already tight at the end of the driving season. The second reason runs are easy to cut is maintenance: refiners have been deferring it while margins are this good, and a ban would hand them the window to do it, on his reading, so output falls further than the export volume alone would suggest.
The shortage moves overseas and gets worse
So I think you'd see a real drop in refined product output in the United States. And the shortage would just be intensified globally.
Bob McNally
Where the scramble lands
And I can't overstate what a scramble you would have for Rotterdam and Asia, diesel and jet.
Bob McNally
Bonus Insights
The rest of the hour
McNally took the second segment of this edition of Bloomberg Surveillance TV. The same hour carried Ulrike Hoffmann-Burchardi of UBS Global Wealth Management on equities and the limits to AI capital spending, and Baiba Braze, Latvia's foreign minister, on Russian sabotage and drone incursions in Europe.
McNally's bottom line is that a diesel export ban is a policy nobody advising the government supports and that a third of the market is nonetheless pricing, because it does one thing its critics concede: it cuts the pump price in Texas and Louisiana for a few weeks, which is exactly as long as an election campaign needs.
Products, Companies & Tools Mentioned
Rapidan Energy Group (His firm. It has carried a 35% probability on US fuel export restrictions since April and expects that number to rise if prices do not cap out in the next few weeks)
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