White House Weighs Defense Production Act as U.S. Refineries Maxed Out

The White House is exploring whether to use the Defense Production Act to bolster U.S. refining capacity after President Trump held talks with nearly a dozen refining executives, according to reporting by Reuters. Administration officials and industry representatives are continuing discussions but have not reached a decision on applying the DPA to the sector.

Refiners told government officials that targeted federal spending would likely yield more immediate additional barrels if it were directed toward expanding or improving existing plants rather than constructing brand-new refineries, which would require billions of dollars and take years to complete. U.S. refineries are already operating near their technical limits: utilization hit roughly 98% in late August following three consecutive months above 95%, the longest such run since 2000.

The potential DPA move follows a presidential determination in April in which Trump designated domestic petroleum production, refining, and logistics as essential to national defense and authorized purchases and financial instruments under Section 303 of the act. The DPA grants the president authority to provide financial assistance and prioritize industrial resources deemed necessary for national defense needs.

Market pressures are sharpening the policy question. U.S. diesel stocks sit about 13% below their five-year average, and diesel prices have climbed past $6 per gallon amid supply disruptions linked to tensions in the Middle East and reduced output from Russia. Industry data cited by Phillips 66 estimates roughly 7 million barrels per day of refining capacity offline in Asia and the Middle East, plus about 1.4 million bpd unavailable in Russia, intensifying demand for whatever capacity remains.

One possible early test of federal support is a planned project in Texas: America First Refining announced in March a proposed 168,000-bpd refinery at the Port of Brownsville, described as the first new U.S. refinery in nearly half a century. It remains unclear whether such projects would qualify for DPA assistance. For now, officials and industry leaders are weighing options for faster relief to the fuel market while talks continue.