Nate Vance: Trump's diesel deal is a shell game

This is The Correspondent's inaugural guest op-ed.

Nate Vance is a retired U.S. Marine and a first cousin of Vice President JD Vance. He spent nearly three years in Ukraine as a volunteer fighter and previously worked in the oil industry. He currently works in Kyiv for the R. T. Weatherman Foundation.

Russia spent months restricting diesel exports, blaming Ukrainian drone strikes for damaging its refineries and straining domestic fuel supplies.

Then President Donald Trump called Vladimir Putin, and suddenly Moscow was ready to supply millions of tons of diesel to the rest of the world.

Quite the turnaround.

As recently as Sept. 30, Russia had extended its diesel export restrictions through the end of October. Nine days later, Trump announced an agreement for Russia to supply more than 4.8 million tons of diesel to American and global markets, and the U.S. Treasury issued a temporary license allowing transactions involving Russian fuel.

Moscow then announced it would begin lifting its export restrictions ahead of schedule.

So what changed?

Either Russia has more diesel available than its previous restrictions suggested, or Moscow is promising fuel it will have to find somewhere else. If the former is true, the question becomes whether Russia has been deliberately constraining supply while the rest of the world pays higher prices. And if that’s the case, the Kremlin is now being rewarded with cold, hard cash.

If the latter is true, where will the diesel come from? Does it involve a short trip across the Caspian Sea?

The indications that this deal has more to do with Iran than it does Russia warrant a story of their own. There are many theories being floated in attempts to explain the “logic” of this deal. All of them are speculative.

Several things remain true. The fundamentals remain unchanged; the Russians are not honest brokers, and financially enriching violent autocrats and religious zealots who have sworn to kill you smells more like political desperation than sound economic theory.

This is the frustrating aspect of Trump’s “diesel deal” with Russia. It is a shell game, an economic sleight of hand, and no intellectually honest player should be buying the trick. Purchasing Russian diesel does not alter the fundamental problem: Global supplies of refined products are insufficient to meet global demand.

President Donald Trump is right about something important in the debate over gasoline and diesel prices: refining capacity matters.

He is not entirely right about the causes of today’s prices, but neither are those who treat the price of crude oil as a reliable proxy for what Americans pay at the pump.

The two are related, but they are not interchangeable commodities. Between a barrel of crude and a gallon of gasoline or diesel lies an enormous industrial system — and increasingly, that system is where our vulnerability resides.

Crude oil is exactly that: a crude, unrefined, raw material. Gasoline and diesel are the finished products. Turning one into the other requires refineries, transportation networks, storage, pipelines and terminals — all of which have finite capacity.

When that capacity is constrained, the price of finished fuel can rise sharply even when movements in the price of crude do not fully explain what consumers are experiencing.

The mistake is assuming that because gasoline begins as crude oil, the two markets move in lockstep. They do not.

Contributed photo, Nate Vance

The more consequential question, then, is not simply whether today’s fuel prices are the result of war in Ukraine, conflict with Iran or refinery disruptions. It is why disruptions elsewhere in the world can so quickly become our problem.

The answer is that the West has spent years reducing the redundancy of its refining system while simultaneously moving away from the fuels that system produces. We pursued efficiency and energy transition while allowing the margin for error to shrink.

Now, as the global energy system is being tested by war and disruption, we are discovering that what looked like excess refining capacity was, in fact, a form of strategic insurance.

To be fair, there are legitimate reasons to close refineries. An aging or inefficient facility can be extraordinarily expensive to operate, particularly when fuel demand is declining, environmental requirements are tightening and newer facilities can produce the same products at lower cost. No serious energy policy should require companies to keep every refinery operating indefinitely simply because it exists.

But not every barrel of “excess” capacity is economically redundant. Some capacity is the industrial equivalent of a spare tire: unnecessary until something goes wrong, and enormously valuable when it does.

Maintaining a reasonable surplus allows facilities to undergo scheduled maintenance, absorb unexpected outages and compensate for disruptions elsewhere without forcing the entire market to compete for a suddenly scarce supply of finished fuel.

The question is therefore not whether we should preserve every refinery, but whether we have allowed the pursuit of “efficiency” to eliminate the redundancy required for national resilience.

That distinction is being tested now. The global energy system is being hit from multiple directions. The war in Ukraine has disrupted Russian energy infrastructure and refining capacity. The conflict involving Iran has placed enormous pressure on global energy flows, particularly through the Strait of Hormuz.

Refinery outages and capacity reductions in the United States and Europe add another layer of constraint.

These events matter. But they are not the whole story.

The Energy Information Administration distinguishes between the cost of crude oil and the costs associated with refining, distribution and retail. Refinery margins can expand dramatically when supplies of finished petroleum products become tight.

In other words, a barrel of crude can be available on the world market while the gasoline or diesel made from that crude is comparatively scarce.

This is why the common political habit of pointing at the price of crude and asking why gasoline has not fallen proportionally is misleading. It is also why blaming every increase in fuel prices on a single foreign adversary is incomplete.

The more important question is why our system has so little room for disruption.

The United States entered 2026 with roughly 18.2 million barrels per day of operable refining capacity, a decline of more than 250,000 barrels per day from the previous year. Europe has experienced an even longer retreat from refining capacity.

Some of these closures were economically rational and unavoidable. Markets change. Facilities age. Demand changes. Environmental standards evolve. Capital naturally moves toward more competitive assets.

But a national energy system cannot be evaluated solely through the lens of an individual company’s balance sheet.

There is a difference between economic efficiency and strategic resilience.

A refinery operating below maximum utilization may appear inefficient during normal conditions; a refinery capable of producing fuel but temporarily offline may appear wasteful.

Maintaining multiple sources of supply can look redundant when global markets are functioning smoothly — until they aren’t.

Redundancy is expensive because its value is realized primarily during a crisis. A spare refinery, pipeline or storage facility may sit underutilized for years. But that apparent inefficiency can be exactly what allows a country to absorb an earthquake, hurricane, mechanical failure, cyberattack, war or embargo without suffering a catastrophic loss of supply.

We understand this principle in almost every other critical system. Hospitals maintain surge capacity, militaries maintain reserve forces and electric grids maintain generating capacity beyond average demand.

Businesses in general keep inventories because just-in-time logistics fail when transportation stops.

Energy should be treated no differently.

Yet the West has increasingly approached energy policy as though efficiency and transition were sufficient substitutes for resilience when they are not.

The fundamental mistake was treating the energy transition as a sequence: first move away from fossil fuels, then build the replacement system.

Energy systems do not permit that luxury.

A transition is not a light switch. It is a decades-long process involving power generation, transmission, storage, transportation, industrial production and millions of individual consumers. The replacement system must be built while the existing system remains capable of carrying the load.

That does not mean preserving fossil-fuel infrastructure forever. It does not mean abandoning emissions reductions or technological development. It means recognizing a simple engineering principle: you should not dismantle critical capacity faster than you can replace the function it performs.

More importantly, the replacement system must possess its own redundancy. We cannot simply exchange one dependency for another and call it energy independence.

This is particularly important because petroleum is not merely a transportation fuel. It remains deeply embedded in agriculture, manufacturing, aviation, shipping, construction, mining and the production of countless goods.

The consequences of a shortage therefore extend far beyond what appears on a gasoline station price sign.

Energy security is national security. A country that cannot reliably move its military, harvest its crops, transport its food or operate its industrial base during a prolonged fuel disruption has a strategic vulnerability regardless of how impressive its economic statistics may look.

That vulnerability is precisely what adversaries exploit.

Contributed photo, Nate Vance

The lesson of the current crisis should therefore not be that the West should abandon the energy transition. Nor should it be that every refinery shuttered over the past decade should have remained open.

The lesson should be that we failed to place enough value on resilience.

We optimized. We streamlined. We removed capacity that appeared unnecessary under normal conditions. And then the world stopped behaving normally.

The war in Ukraine did not create our vulnerability. It exposed it.

The conflict involving Iran did not create our vulnerability. It exposed it.

Neither Ukraine, Iran, Russia, California nor any political party can be made solely responsible for a vulnerability that accumulated over decades. But election seasons make that difficult to acknowledge.

It is far easier to tell voters that someone else caused the problem. It is harder to explain that modern energy systems are extraordinarily complex, that finished fuel is not crude oil, that refining capacity cannot be conjured overnight, and that resilience costs money precisely because it requires maintaining capabilities that may not be needed tomorrow.

That is the conversation we should be having. The objective should not be the cheapest possible energy system under ideal conditions. It should be the most resilient energy system we can reasonably afford while transitioning to the technologies of the future.

That means maintaining sufficient refining capacity to absorb foreseeable disruptions. It means maintaining strategic inventories. It means diversifying supply routes. It means accelerating the development of nuclear power, renewables, storage, transmission and other technologies capable of reducing petroleum dependence.

And it means refusing to dismantle existing capabilities simply because we assume their replacements will arrive on schedule.

We should pursue the transition, but we should not confuse the destination with the journey.

A resilient society does not eliminate every redundancy because redundancy looks inefficient on a spreadsheet. It recognizes that some forms of inefficiency are actually insurance.

We did not run out of oil — we ran out of margin for error.

And the price we are paying today is not simply the price of a war in Ukraine or a conflict involving Iran. It is also the price of having spent years assuming that the world would remain stable long enough for us to replace the system we were dismantling.

That assumption was never a sound basis for national security.

It is time to build an energy transition that does not merely promise a better system tomorrow, but keeps the country secure today.