AILSA CHANG, HOST:
OK, there are plenty of legal and political questions surrounding President Trump's deal to get Russia to release more oil to the U.S. and global markets. And, of course, a lot of Americans are wondering how that deal could affect the price of diesel. NPR energy reporter Willa Rubin joins us now to talk about all of this. Hi, Willa.
WILLA RUBIN, BYLINE: Hi, Ailsa.
CHANG: Hi. OK, so give us the lay of the land here. What is happening with the price of diesel in the U.S. right now?
RUBIN: Well, it hit an all-time high a few weeks ago, which is important for the U.S. economy. You know, our industrial supply chain relies on diesel, tractors that farmers use, trucks that bring your food from farms eventually to the grocery store. If diesel is expensive, that contributes to the price of everything that you buy. Now, the price of a gallon has come down a little bit since that September high. On average, it's now $6.27, according to AAA, but that is still really high. Diesel is about $2.60 more than this time last year.
CHANG: OK, and explain this to me. What did President Trump say about how he expects this deal would work exactly?
RUBIN: Yeah, so in a post on Truth Social on Friday, President Trump said that Russia had agreed to release 300,000 tons of diesel to the U.S. and to global markets immediately. But, like, is that a little or a lot in terms of how much the U.S. actually uses?
CHANG: Yeah, which is it?
RUBIN: Yeah. So to put this in context for the rest of October, Will O'Neil is an analyst at S&P Global Energy. He's a follower of all things diesel.
WILL O'NEIL: Because I could even do some quick Excel math. So 300,000 tons over the course of 20 days is...
RUBIN: I love that you broke out an Excel spreadsheet mid conversation (laughter).
O'NEIL: That's what I do. That's my job.
RUBIN: So he figured out that if you convert tons to barrels and the U.S. uses up to 4 million barrels a day, the entire amount expected to be released in October adds up to about half the diesel the U.S. uses in just one day.
O'NEIL: It's drops in the bucket.
RUBIN: Drops in the bucket. And if you do some more math using the entire amount expected to be released over the coming months, O'Neil said it adds up to about nine days' worth.
CHANG: Let me ask you this. Is Russia really in any position to export all of this diesel?
RUBIN: Analysts in the U.S. don't know, but what...
CHANG: OK.
RUBIN: ...They do know is that Russia's refinery capacity has been significantly reduced by Ukraine's strikes. O'Neil says it's probably reduced 40- to 45% of their capacity.
O'NEIL: Ukrainian drone strikes have taken so much of its refining capacity offline that it just simply doesn't have the diesel production to send to global markets.
RUBIN: He says this deal does not change that reality. Russia has had an export ban since July, though they partially lifted it on Saturday. Also worth noting, the U.S. has had wide ranging sanctions on Russian energy since its full scale invasion of Ukraine in 2022. On Friday, the Treasury Department announced it was temporarily waiving sanctions on diesel for about six months. And this has gotten some pushback from members of Congress on both sides of the aisle. This is a really complicated situation, Ailsa, with a lot of moving parts.
CHANG: Clearly. OK, if Russia really can bring this diesel to market, could that help lower prices in the U.S., you think, eventually?
RUBIN: Big picture, what drives diesel prices is global demand. And there's a global diesel deficit right now. A good chunk of that is due to the war in Iran. Claudio Galimberti is a partner and chief economist at Rystad Energy. He says the world is missing up to 1.5 million barrels per day that normally come from the Middle East and another million barrels that would come from Russia.
CLAUDIO GALIMBERTI: So it's a huge gap, and this deal only address (ph) a very small portion of that.
CHANG: OK, Willa, I'm no economist, but it sounds like he doesn't think this will really lower prices all that much. Am I getting that right?
RUBIN: Yeah. Analysts told me we will only start to see big meaningful drops in prices by solving these bottlenecks by ending the wars.
CHANG: That is NPR's Willa Rubin. Thank you so much, Willa.
RUBIN: Thank you so much, Ailsa.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
