Trump weighs presidential memorandum to cut surging US diesel prices

US President Donald Trump is reportedly preparing to issue a new presidential directive soon in a bid to rein in escalating diesel prices across the country.

According to a report by the Reuters news agency citing three oil industry sources, the White House is weighing the enactment of the prepared package of measures directly in the form of a presidential memorandum.

The memorandum in question will reportedly instruct multiple US federal agencies to find and implement ways to lower diesel fuel costs, primarily by expanding oil extraction operations and refinery output.

White House plans to deploy Defense Production Act

According to information shared in the report, the Trump administration is exploring legal avenues to overcome restrictions imposed on energy production by state administrations and local government authorities.

The administration could reportedly invoke the Cold War era Defense Production Act to that end.

The legislation in question grants the US president the authority to provide state loans and financial guarantees to expand the production of materials of strategic importance. The law also makes it possible to require private companies to prioritise government orders.

Reuters reported that the White House is comprehensively examining the prospect of putting this legal mechanism into effect.

In contrast, oil refinery executives were noted to have made a recommendation to government officials last month.

Industry representatives suggested allocating federal budget resources toward modernising existing operational refineries and expanding their capacity, rather than establishing new facilities from scratch.

Plant managers stated that building new facilities would require substantially more time and higher costs.

The Wall Street Journal newspaper also highlighted in a report published in mid September that US-based oil companies were warning of the onset of a global fuel crisis.

The newspaper noted that during the period in question, diesel prices broke records, whilst the price per barrel of crude oil approached the $101 mark.

American Automobile Association (AAA) data show that as of Thursday, 8 October, the average diesel fuel price nationwide stood at $6.28 per gallon (approximately 3.8 litres).

High fuel costs pose risk ahead of congressional elections

It was pointed out that the increase in diesel fuel prices creates political risks for the Republican Party ahead of the congressional elections to be held on 3 November.

It was noted that the outcome of the vote will determine whether Republicans can maintain their majority in Congress.

Because diesel is heavily consumed in freight transport, the agricultural sector, and home heating in particular, price rises in the fuel were stressed as driving headline inflation higher.

Trump previously announced that he had reached an understanding with Russian President Vladimir Putin regarding the supply of Russian diesel fuel to both the American and global markets. The US president also thanked Putin for the arrangement concerning Russian diesel.

The US Department of the Treasury extended a temporary waiver licence permitting commercial transactions involving Russian diesel fuel until 7 April 2027.

Under the delivery schedule shared by Donald Trump, Russia will immediately ship more than 300,000 tonnes of fuel.

Shipments will reportedly continue with 500,000 tonnes in November, followed by the delivery of an additional 1 million tonnes of fuel. Over the remainder of the process, Moscow could send a further 3 million tonnes of diesel depending on the overall technical condition of refineries.

Following the announcement of the consensus between the two leaders, US diesel futures fell by approximately 5% to reach $4.64 per gallon.

Meanwhile, energy analysts consulted by Reuters express doubt as to whether the additional shipments arriving from Russia will suffice to secure a lasting price decline across the markets.