US energy secretary says diesel will fall below $6 a gallon after G7 reserve release

US Energy Secretary Chris Wright said US diesel prices will fall below $6 a gallon, pointing to a G7 agreement to release emergency fuel reserves. In an interview with CBS on Oct 4, Wright called the plan by the Group of Seven major economies to release 100 million barrels of diesel and crude stockpiles over the next four months “a very big step,” Yonhap reported from Washington. Chosun Ilbo carried the same forecast that prices would soon drop below $6 a gallon, and Newsis ran a matching headline, though its article text covered an unrelated topic. [ 1 , 2 , 3 ]

Wright said European countries do not refine enough diesel to supply their own economies and therefore hold large stockpiles. “They very much want US diesel to keep coming into Europe,” he said. “They have a lot of stockpiled diesel. There is no reason not to release some of it.” He said US diesel prices had already fallen more than 20 cents a gallon on news of the European release, and predicted prices would go below $6 before long. [ 1 ]

The release lowers diesel prices not only in the United States but in Europe and worldwide, Wright said, adding that rising refinery runs meant prices should keep falling through the winter and into next spring. Chosun Ilbo's summary also reported that refining capacity was increasing and that the decline would continue into next spring. [ 1 , 3 ]

Asked whether President Donald Trump's pressure to ban US diesel exports had produced the G7 agreement, Wright said it “may have helped quite a bit.” Trump has repeatedly said he could ban diesel exports, while Wright and the US refining industry have argued against it. Yonhap said it had been reported that the administration told Europe it would ban US diesel exports unless Europe released strategic reserves. [ 1 ]

Wright also pointed to increased energy supply through the Strait of Hormuz and record US gasoline production at a time when demand declines after the summer driving season as reasons the downward price trend would continue. [ 1 ]

He declined to rule out a price shock from Iran. Asked whether there was a guarantee that Iran would not raise military tensions this month ahead of US midterm elections on Nov 3, he said: “There is no such thing as a guarantee.” On the possibility of an expanded war with Iran in November, when a third US carrier strike group arrives in the Middle East, he said the president always makes plans for contingencies and is always negotiating. [ 1 ]