US President Donald Trump said on Tuesday that he backs the idea of banning US diesel exports, and has called for such a ban and is examining it, as a way to bring down fuel prices that have climbed to record highs. No decision has been announced. Industry groups and energy analysts warn the measure could backfire, lowering US prices only briefly while pushing global prices higher, squeezing supply of other fuels and straining relations with allies.US diesel futures dipped when Trump raised the idea. The average US pump price for diesel has reached a record of around $6.50 a gallon, according to motoring group AAA. Here is how a ban would work, and why so many market watchers doubt it would deliver what its backers hope.Why diesel matters so muchDiesel is the workhorse fuel of the global economy. It powers trucks, trains, ships, tractors and much of the machinery used to make and move goods, so its price feeds into the cost of almost everything, from groceries to building materials. That makes a diesel spike an inflation problem as much as an energy one, and a political problem ahead of the 3 November US midterm elections.Why prices are so highTwo conflicts have hit supply at once. Ukrainian strikes on Russian refineries have cut exports from one of the world's biggest diesel suppliers, while the US-Iran war has disrupted or halted trade along key routes, including the Strait of Hormuz, reducing flows from Gulf producers such as Saudi Arabia and the United Arab Emirates.Buyers have turned to the United States to fill the gap. US diesel exports hit a record of about 1.6 million barrels a day in August, up from roughly 1 million barrels a day in February before the war began, according to ship-tracking data. Major buyers include Brazil, Chile, Mexico, Peru, Morocco, France and the United Kingdom.That export pull shows up at home. US on-road diesel inventories have dropped to about 97 million barrels, nearly 13% below the five-year seasonal average, even though US refineries are running at around 97% of capacity. In other words, American refiners are already producing close to flat out. The shortage is not a lack of effort; it is that the world wants more diesel than it can currently make.What a ban would do to pricesThe logic behind a ban is simple: keep American diesel in America and domestic supply rises, so prices fall. In the very short term, that is likely what would happen in parts of the US.The effects elsewhere run the other way. Removing up to 1.6 million barrels a day from a market that is already short would push international prices higher. One energy economist estimated world diesel prices could rise by as much as 100%. The reason lies in what economists call low price elasticity of demand. Truckers, farmers and factories cannot easily switch fuels or stop working when diesel gets expensive, so when supply falls, prices have to rise a long way before demand drops enough to balance the market.Why refiners can't just make more diesel for AmericansThis is the part of the debate that is easiest to miss. A refinery does not produce diesel on its own. Every barrel of crude it processes is split into a range of products, including gasoline, diesel, jet fuel and heavier oils. Refiners can adjust that mix only at the margins.If a ban cut US refiners off from their export customers, they would be left with more diesel than they could sell at a profit at home. Analysts and traders say the likely response would be to process less crude. An energy fellow at a US think tank noted that no business sells its product at a loss, so any price relief from a ban would probably be short-lived as refiners scaled back output.Lower refinery runs mean less of everything, not just diesel. Gasoline, jet fuel and other products would all be in shorter supply, which could push their prices higher. A policy aimed at easing fuel costs could end up raising them at the gasoline pump.Why the surplus can't simply be redirectedMuch of America's diesel export capacity sits on the Gulf Coast, which produces far more diesel than it consumes. The American Petroleum Institute, the industry's main lobby group, opposes a ban and says geography and infrastructure prevent that surplus from easily reaching every US region that needs it. Pipelines linking the Gulf Coast to other regions have limited capacity, and shipping fuel between US ports by sea is restricted to US-built, US-flagged vessels, which are in short supply. For some coastal markets, importing fuel from abroad can be easier than sourcing it domestically. A ban could therefore leave Gulf refiners with fuel they cannot move while other US regions remain tight.The cost to alliesEurope has been structurally short of diesel for years and has leaned heavily on US Gulf Coast supplies, particularly since it stopped buying Russian fuel. A consultancy analyst said a ban would seem damaging to some key US allies and described the calls for one as more political signalling than practical policy.There is also a longer-term reputational risk. The same energy economist compared a diesel ban to President Richard Nixon's 1973 soybean embargo. That temporary restriction angered importers such as Japan and, some analysts argue, pushed buyers towards Brazil for good. The lesson, in this view, is that once customers see a supplier as unreliable, they look elsewhere even after the restriction ends.The United States has experience with the reverse move too. It banned most crude oil exports from 1975 until 2015, and lifting that ban helped turn the country into one of the world's largest energy exporters.The politicsPressure for a ban is coming partly from Republican Senate candidates in some of the most competitive races, who have urged the administration to act on fuel costs. With diesel feeding directly into the prices voters see on shelves, a visible response ahead of November has obvious appeal, even if the market effects are uncertain.What to watchWhether Trump moves from backing the idea to formal action is the first question, along with the details of any measure, such as whether it would be temporary, partial or limited to certain destinations. In markets, the key signals would be the gap between US and European diesel prices, refinery run rates and gasoline prices, which would show early whether cheaper domestic diesel is coming at the cost of dearer fuel elsewhere. For Europe and the other major buyers of US diesel, any hint of a ban is likely to trigger a scramble for alternative supply, adding to upward pressure on international prices. This article was written by Eamonn Sheridan at investinglive.com.