Trump's diesel price relief efforts grow costlier as election nears

Reuters | Jarrett Renshaw and Leah Douglas

President Donald Trump has offered farmers billions of dollars, relaxed rules for truckers, eased sanctions on Russian fuel and pressed European allies to release emergency stocks, yet US diesel prices rose nearly 10 cents a gallon in the latest week to an average of $6.28. Prices remain near record highs, the Energy Information Administration said.

Republicans are defending narrow majorities in Congress ahead of the November midterms, and nearly 80% of Americans blame Trump for higher costs, according to an October Reuters/Ipsos poll. The pressure is sharpest in Farm Belt states such as Iowa and Kansas. Easing sanctions on Russian diesel has drawn bipartisan criticism. Analysts say the Iran conflict, far more than Ukrainian attacks on Russian refineries, has driven the spike. An $8 billion aid package would lift farm payments to a record $55.4 billion, above the $45 billion of 2020, but it arrives after the November 3 election.

Comment

The sanctions on Russian diesel were meant to restrict Moscow's energy revenues, so easing them turns a standing pressure into a bargaining chip. The stated returns are Putin's entry into negotiations and Stephen Hubbard's release, both discrete events. The revenue the sanctions restricted recurs with every cargo. Analysts rank the Iran conflict above Ukrainian refinery strikes as the bigger driver, so Russian cargoes may do little at the pump.

In 1982 the Reagan administration widened sanctions on equipment for the Soviet gas pipeline to Western Europe, angered allies and lifted them in November. The present case runs the other way, since Washington is easing its own sanctions on Russian diesel while pressing European allies over emergency stocks. A threat to restrict US diesel exports sits behind that pressure, and it has already produced diplomatic friction. European governments could read the pairing as transactional, which could make them less willing to follow US sanctions on Russian energy.

Two pressures on Russian diesel now point in opposite directions. Ukrainian attacks on Russian refineries have helped tighten supplies, while the US relief invites Russian diesel to flow toward American buyers. Kyiv's campaign and Washington's concession could therefore work against each other on the same barrels.

Strategic Question for Discussion

If the easing of sanctions on Russian diesel yields neither talks with Putin nor lower US pump prices, what does that do to European willingness to follow Washington's next sanctions on Russian energy?

The pattern suggests the damage would be gradual rather than sudden. European governments already face US pressure over emergency stocks and a threat to limit US diesel exports, and a concession with no visible return would give them a reason to treat the next sanctions request as negotiable. My assessment is that the effect would appear first as slower European responses, with open refusal coming later if at all.

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