The White House is weighing whether to invoke the Defense Production Act to expand US oil refining capacity, as diesel prices cross $6 per gallon nationally for the first time and refinery utilization hits 98%. The administration has already used similar wartime-era authority to restart offshore production in California, and it now faces a decision on whether to extend that support to refining.
The White House is actively considering the Defense Production Act to expand US oil refining capacity, deploying Cold War-era industrial policy tools to address a fuel crisis tied to the ongoing conflict with Iran. Diesel prices have crossed $6 per gallon nationally for the first time in history, and refinery utilization has hit 98%, leaving the country's refining infrastructure with almost no slack to absorb supply shocks or seasonal demand swings.
A pattern of wartime authority
This would not be the administration's first use of the Defense Production Act on energy matters. President Trump issued a determination on April 20, 2026, declaring domestic petroleum production, refining, and logistics essential to national defense. That determination opened the door for the Department of Energy to channel financial support through DPA Section 303, which subsidizes production of materials deemed critical for defense.
A follow-up executive order on September 8, 2026 expanded DPA powers specifically for energy-related authorities. Three days later, reports emerged that the White House was in active discussions about deploying those powers toward refining capacity. The administration has already used similar authority to restart offshore operations in California, where the Santa Ynez Unit resumed production in March 2026 and is expected to add roughly 50,000 barrels per day to domestic output.
Upgrades favored over new builds
Refining executives who took part in White House discussions reportedly pushed a pragmatic message: prioritize efficiency upgrades at existing facilities over new construction. Still, one major new project remains in the mix — America First Refining has proposed a 168,000 barrel-per-day refinery in Brownsville, Texas, which would be the first new refinery built in the US in nearly 50 years if it moves forward. The project has already secured a 20-year offtake agreement with Reliance Industries, though DPA funding for it remains undecided.
Why capacity is so tight
Between 2019 and 2023, the US lost more than a million barrels per day of refining capacity as facilities converted to renewable diesel production or closed outright. The industry generally considers utilization above 95% uncomfortably tight, and normal maintenance shutdowns, weather events, or unexpected outages can trigger immediate price spikes when the system runs this hot.
No final decision has been announced, but the pace of executive actions since April suggests the administration is building toward a formal invocation rather than simply floating the idea.
Source: Crypto Briefing
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