Goldman Sachs Warns US Diesel Export Ban Would Be Inflationary
Goldman Sachs reports that a US ban on diesel exports would initially lower domestic prices but eventually drive up inflation and gasoline costs.
A report released October 2 by Goldman Sachs Global Investment Research analyzes the potential economic consequences of a United States ban on diesel exports. The analysis indicates that such a policy would initially reduce domestic retail diesel prices by approximately $0.25 per gallon per week.
This price drop would be temporary, however, as the report suggests the policy would likely become inflationary after two months. This shift would occur as diesel storage reaches capacity and gasoline prices rise. Because gasoline accounts for a larger share of the consumption basket than diesel, the net impact on the economy would be inflationary.
The research notes that the core inflation effect would likely remain small and negative for at least 12 weeks due to the delayed pass-through of producer costs to consumer prices. On a global scale, the report identifies Latin America as the region most exposed to a sudden supply cutoff of US diesel.
