Rising fuel prices tied to the conflict with Iran have pushed the Trump administration toward an unusual policy lever, with the White House now examining whether the Defense Production Act could be used to grow American oil refining capacity, as per reporting by Reuters.
The conflict has laid bare how dependent the country remains on global crude flows and how quickly prices can spike, according to two sources familiar with the administration’s plans.
During a recent meeting between President Donald Trump and nearly a dozen U.S. refiners, White House officials pressed executives on how federal support could best add capacity, and that is where the idea surfaced. No final decisions were reached, and those present expect the talks to continue.
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Broad authority to direct industrial resources and to offer financial incentives for materials deemed important to national defense rests with the president under the act, which is regarded as a tool of last resort and has never been applied to add refining capacity. In April, a presidential determination authorized use of the act to support U.S. petroleum production, refining and logistics, and the current discussions build on that step.
According to the executives, federal dollars would go further toward making existing plants more efficient or expanding them than toward bankrolling a brand new refinery, an option that would cost far more and take years to build.
The strain shows at the pump. For the first time, the national average diesel price has topped $6 a gallon, and gasoline prices remain elevated, an affordability problem the administration wants to contain ahead of November’s midterm elections.
The math, however, exposes the limits of the approach. Utilization already sits at 98%, according to the latest data, leaving refiners running near full tilt. A decade of closures among unprofitable plants has also shrunk domestic capacity and concentrated output on the Gulf Coast.
“Expanding that capacity is a top priority for the President and his energy team, who are evaluating concrete options to increase our refining capacity through regulatory reform, faster permitting, and additional investment,” White House spokeswoman Taylor Rogers said.
