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The Trump administration’s consideration of restrictions on U.S. diesel exports could have significant implications for construction subcontractors and specialty trade contractors, particularly at a time when diesel prices are already elevated. President Trump has expressed support for restricting or banning U.S. diesel exports as a way to increase domestic fuel supplies and potentially reduce prices. However, the proposal remains under consideration. Energy Secretary Chris Wright has questioned whether an export ban would achieve that goal, warning that restricting exports could cause refiners to reduce production and potentially push fuel prices higher. For the construction industry, the issue goes well beyond the price contractors pay at the pump.

Diesel powers much of the equipment used on construction sites, including excavators, cranes, generators, compressors, skid steers, telehandlers and other heavy equipment. It also fuels many of the trucks responsible for moving construction materials and equipment to and from jobsites. As a result, changes in diesel prices can affect virtually every stage of a construction project. For specialty subcontractors, higher diesel costs could increase expenses associated with:

  • Operating construction equipment; 
  • Transportation of employees, equipment and materials; 
  • Delivery of drywall, steel, glass, flooring and other construction products; 
  • Equipment rentals and transportation; 
  • Material distribution and warehousing; and 
  • Fuel surcharges imposed by suppliers and trucking companies. 

Even subcontractors that do not operate large amounts of diesel-powered equipment can be affected because diesel is an important component of the broader construction supply chain.

The impact would vary significantly among construction trades. Excavation, sitework, paving, demolition, concrete, utility and other equipment-intensive contractors would likely experience a more direct impact because of their significant use of diesel-powered machinery.

Other specialty contractors, including drywall, painting, flooring, electrical and finishing contractors, could experience more indirect effects through increased material transportation, equipment rental and supplier costs. For example, a drywall contractor may not consume significant quantities of diesel at the jobsite. However, the drywall must be manufactured, transported to a distributor, delivered to the jobsite and potentially moved with diesel-powered equipment. Higher fuel costs at each stage can ultimately increase the contractor’s cost of doing business.

One of the most significant concerns for subcontractors is the uncertainty created when fuel prices change after a project has been bid. Construction projects are frequently priced months before work begins and may continue for a year or longer. A subcontractor that establishes its price based on today’s fuel, transportation and material costs could face substantially higher expenses when the work is actually performed. Contractors generally have three options: increase their bids to account for potential fuel increases, absorb the additional costs or negotiate contract provisions that provide some protection against significant fuel-price increases. For small subcontractors competing for work, adding substantial contingencies to a bid can make the company less competitive. Absorbing the additional costs, however, can directly reduce already-tight profit margins.

The issue also has implications for federal construction procurement. Federal agencies and prime contractors establish project pricing based on assumptions about labor, materials, equipment and transportation costs. Significant increases in fuel prices can disrupt those assumptions, particularly on large infrastructure and construction projects with lengthy performance periods. ASA has long advocated for policies that recognize the economic realities facing small construction businesses. Fuel-price volatility should be considered as part of that discussion, particularly when federal contractors and subcontractors are expected to perform work under fixed-price arrangements.

The administration’s proposal also presents a complicated economic question. The United States exports substantial quantities of diesel and other refined petroleum products. Supporters of an export restriction argue that keeping more fuel in the domestic market could increase supply and reduce prices for American consumers. However, opponents of an export ban argue that restricting exports could cause U.S. refiners to reduce production because they would lose access to important foreign markets. Energy Secretary Chris Wright has publicly argued that an export ban could actually increase fuel prices rather than reduce them. That uncertainty is particularly important for construction companies that must make long-term decisions about equipment purchases, project bids and staffing.

ASA members should continue monitoring several issues as the administration evaluates potential restrictions on diesel exports:

  • The potential effect on wholesale and retail diesel prices; 
  • Diesel availability in different regions of the country; 
  • Transportation and fuel surcharges; 
  • Construction material delivery costs; 
  • Equipment rental and operating costs; 
  • Fuel escalation provisions in construction contracts; 
  • The treatment of fuel-price increases under federal contracts; and 
  • The broader effect on construction project costs and federal procurement. 

For ASA and its members, the diesel export debate demonstrates why energy policy is also a small-business and construction issue. The cost of diesel affects far more than a contractor’s fuel bill. It influences the cost of operating equipment, transporting workers and materials, renting equipment and ultimately bidding and performing construction projects. As the administration considers potential restrictions on diesel exports, policymakers should evaluate the impact on the entire construction supply chain and recognize the particular challenges faced by small subcontractors operating on fixed-price projects.

For construction subcontractors, the central question is not simply what happens to the price of diesel at the pump. It is what happens to the total cost of building—and whether small businesses will be able to absorb those additional costs while remaining competitive.