White House weighs Defense Production Act to expand U.S. refining capacity

September 12, 2026 at 01:21 AM2 min

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The White House is considering using the Defense Production Act to add U.S. refining capacity, with refineries running at 98% and diesel above $6 per gallon. The proposal was discussed at President Trump's meeting with refiners, but no decision has been made. Discussions continue even as diesel inventories sit 13% below the five-year average.

Key Facts

U.S. refinery utilization reached 98% in late August after three consecutive months above 95%, the longest such stretch since 2000.
Diesel prices crossed $6 per gallon this week, and U.S. diesel inventories are 13% below their five-year average.
Phillips 66 estimated roughly 7 million bpd of refining capacity was offline in Asia and the Middle East, with another 1.4 million bpd unavailable in Russia.
America First Refining plans a 168,000-bpd refinery at the Port of Brownsville, announced in March as the first new U.S. refinery in nearly 50 years.

Defense Production Act Consideration

The White House is considering using the Defense Production Act to add U.S. refining capacity. The proposal was discussed during President Donald Trump's recent meeting with nearly a dozen U.S. refiners, according to Reuters. No decision has been made, and discussions are expected to continue. Refining executives told administration officials that federal money would produce more barrels faster if used to expand existing plants or improve refinery efficiency. Building an entirely new refinery would cost billions and take years.

Refinery Capacity and Market Pressures

U.S. refiners have little spare room today, with utilization reaching 98% in late August. Refinery utilization spent three consecutive months above 95%, the longest such stretch since 2000. Phillips 66 estimated last month that roughly 7 million bpd of refining capacity was offline in Asia and the Middle East, with another 1.4 million bpd unavailable in Russia. U.S. diesel inventories are now 13% below their five-year average. Diesel prices crossed $6 per gallon this week as disruptions in the Middle East and Russia squeezed global fuel supplies.

Potential Texas Project

One possible test is already taking shape in Texas. America First Refining plans a 168,000-bpd refinery at the Port of Brownsville, announced in March as the first new U.S. refinery in nearly 50 years. Reuters said it remains unclear whether the project could receive DPA funding.