When Export Bans Backfire: Why Grassley's Diesel Fix Won't Work, and What Actually Would

What Happened

On Saturday, Iowa Sen. Chuck Grassley pressed President Trump to impose an embargo on diesel exports, drawing a parallel to 1970s agricultural export restrictions. Grassley's argument was straightforward: if export embargoes kept farm prices down decades ago, why not use the same tool now as diesel prices strain truckers, farmers, and anyone who depends on fuel to move goods?

The suggestion reflects real pain. Diesel prices hit $3.24 per gallon in early 2026, squeezing margins for the trucking industry and rippling through supply chains. Grassley isn't inventing the problem, he's pointing at something people feel in their wallets every day.

But the leap from problem to solution skips over what actually happens when you seal off a major commodity from global markets.

What It Means for You

An export embargo sounds like it protects American consumers. Keep the fuel at home, lower the price for drivers here, help truckers compete. The logic is intuitive. It's also not how global commodity markets work in 2026.

When you embargo diesel exports, you don't just lower the price. You reduce the supply available to refineries, because refineries supplying your local gas pump operate on the assumption they can sell surplus production globally. Cut off that outlet, and they have less incentive to refine as much. You also invite other countries to do the same, shrinking the international market you depend on when domestic supply can't meet demand.

More immediately: an embargo would likely trigger counter-measures from trading partners. The EU, India, and other major buyers of U.S. refined products would look elsewhere. American refiners lose customers. Refineries run less, not more. The price at the pump doesn't fall. It rises, because you've artificially constrained supply and lost the revenue that keeps refineries operating.

The truckers Grassley means to help would face higher fuel costs. The farmers, his own constituents, would pay more to move crops to market.

The Bigger Picture

The 1970s parallel Grassley invokes is real but inverted. President Nixon did restrict agricultural exports in 1973 to combat domestic food inflation, a crisis move in a moment of genuine scarcity. It remains controversial among economists. The embargo did lower domestic farm prices temporarily, but it also sparked international outrage, disrupted American agricultural trade for years, and ultimately didn't solve the inflation problem. Inflation is a monetary and wage issue, not a supply issue once you get past genuine shortages.

Diesel prices in 2026 aren't a shortage story. U.S. refineries produce roughly 15% more refined petroleum products than domestic demand requires. The issue isn't scarcity. Global prices set the floor, and crude oil costs are set globally. An embargo doesn't change crude prices. It just traps you paying more to produce fuel you could have sold, then paying global prices anyway when your own supply tightens.

What actually drives fuel affordability is refinery capacity utilization, crude oil prices (set globally and tied to geopolitics), and the difference between what refineries pay for crude and what they charge for finished products. An embargo controls none of these.

The real issue underneath Grassley's concern is legitimate: working people and small businesses feel squeezed by prices that don't match their paychecks. Wages have grown 33.6% since 1979, while productivity rose 92.4%. That gap compounds across every expense, fuel, rent, food, healthcare. A diesel embargo is a shortcut that fails. What would work is addressing why wages haven't kept pace with what things cost, why monopoly refiners capture excess profits, why people working full-time in America can't afford to live in it.

Where This Goes

Grassley's proposal will likely gain traction with voters frustrated by high prices and skeptical of global trade. It feels like action. It offers a clear villain (exports) and a clear fix (embargo). Politicians should hear that frustration.

But policy that feels good and policy that works are different things. Embargoes on commodities you produce in surplus don't lower prices. They raise them, by creating artificial scarcity and cutting off the revenue that funds production. They invite retaliation and shrink your room to negotiate on the things that actually matter.

The Common Good Party's trade position is explicit: "Trade generated $2.6 trillion in gains, while destroying 2.4 million jobs in communities that never recovered. The fix is fair rules, not blanket tariffs." That logic extends to embargoes. The answer to broken trade isn't to break trade further. It's to write rules that work: ones that protect workers and communities, require fair labor standards and environmental rules from trading partners, and invest in the places trade has hurt.

On fuel specifically, the fix involves three things an embargo does nothing to address: breaking refinery monopolies so competitive pressure drives prices down, stabilizing crude supplies through smart foreign policy rather than market-rigging, and raising the wages that make fuel costs survivable. A trucker making $65,000 a year can absorb a 30-cent-per-gallon fuel increase if wages rise to $75,000. Seal off diesel and that trucker still can't afford the fuel, now at a higher price, and has fewer customers because the supply chains that depend on him have already shifted to imported fuel.

Grassley is hearing his constituents correctly. He's addressing the wrong problem with a tool that will make it worse.