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The White House is actively considering using the Defense Production Act to expand US oil refining capacity, a move that would deploy Cold War-era industrial policy tools to address a fuel crisis driven by the ongoing conflict with Iran.
Diesel prices have crossed $6 per gallon nationally for the first time in history, and US refinery utilization has hit 98%. That second number is the one that really matters: it means the country’s refining infrastructure is essentially maxed out, with almost no slack left to absorb supply shocks or seasonal demand swings.
The DPA playbook so far
This wouldn’t be the administration’s first time reaching for 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 allows the government to subsidize and incentivize production of materials deemed critical for defense.
On September 8, 2026, a follow-up executive order 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 oil operations in California. The Santa Ynez Unit, which had been dormant, resumed production in March 2026 and is expected to add roughly 50,000 barrels per day to domestic output.
Upgrades over new builds
Refining executives who participated in White House discussions apparently pushed a pragmatic message: focus on efficiency upgrades at existing facilities rather than constructing entirely new refineries.
That said, at least one new construction project is in the mix. America First Refining has proposed building a 168,000 barrels-per-day refinery in Brownsville, Texas. If it moves forward, it would be the first new refinery built in the US in nearly 50 years.
The Brownsville project has already secured a 20-year offtake agreement with Reliance Industries, the Indian conglomerate, for its output. Whether the project ultimately receives DPA funding remains undecided.
Why refineries are the bottleneck
Between 2019 and 2023, the US lost more than a million barrels per day of refining capacity as several facilities converted to renewable diesel production or simply closed.
Refinery utilization at 98% leaves essentially no margin. Normal maintenance shutdowns, weather events, or unexpected outages can trigger immediate price spikes when the system is running that hot. The industry generally considers utilization above 95% to be uncomfortably tight.
What to watch
Investors in the refining sector will be tracking two things closely. First, whether the administration formally invokes DPA authority for refining projects, which would signal real capital flowing toward capacity expansion. Second, whether regulatory streamlining actually materializes, because financial incentives alone won’t solve the timeline problem if permitting remains a multi-year obstacle course.
No final decisions have 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.
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