Trump allocates $150 million to support U.S. oil refining amid supply disruption
Key Facts
The U.S. Department of Energy announced on October 22 a plan to provide up to $150 million in funding to expand oil production, storage and logistics at refineries in the United States. The funding comes from Title III of the Defense Production Act, and the department expects the initiatives to raise total U.S. refining output by millions of gallons per day once implemented. It said the support would cover gasoline, diesel, jet fuel and other petroleum products. The decision gives the administration tools to intervene in energy capabilities it classifies as essential to national defense, but does not announce an immediate addition to supplies. The project selection process is still underway, and the department said it would announce its choices "in the near future".
The presidential memorandum cites Section 303 of the Defense Production Act and deems oil exploration and production, gathering and transportation pipelines, storage and marine terminals capabilities necessary for national defense. It said action was needed because of financing constraints and lengthy lead times, as well as permitting and infrastructure bottlenecks and limited supply chains. This diagnosis holds that expanding domestic capacity faces obstacles beyond the availability of funding alone, extending to project execution and the infrastructure required. The memorandum authorized the Secretary of War to implement the decision, including making purchases, entering into commitments and using the financial tools needed for the projects. It also directed that the decision be published in the Federal Register.
The memorandum did not name specific projects that could receive funding, Reuters reported. The announcement follows Vice President J.D. Vance's statement the previous week that the administration would use the law to expand the capacity of a Texas refinery owned by Delek US Holdings. That provides prior context for selecting a project in the refining sector, but does not identify the beneficiaries of the plan announced on October 22. Energy Secretary Chris Wright said the funds would be used "strategically and in partnership with the private sector" to strengthen existing energy infrastructure. The department still needs to complete and announce its project selections before it becomes clear how the funding will be distributed.
The plan comes amid a global shortage of petroleum product supplies, particularly diesel, which has bolstered refining margins and international demand for U.S. diesel exports, according to the Energy Information Administration. The U.S. average retail gasoline price was $4.35 per gallon in September, while the average diesel price reached $6.29; the agency attributed the increases to crude oil and refining margins. It also raised its estimate for the average spot price of Brent in the fourth quarter of 2026 to $105 per barrel, up $14 from the previous month's forecast. These figures provide context for the importance of raising domestic refinery output, but do not specify how much the funding will add to supply or when it will appear. The agency set November 10, 2026, as the release date for its next energy outlook.
U.S. crude oil production averaged about 13.6 million barrels per day in 2025, making the United States the world's largest crude producer, Reuters reported. But that figure does not indicate the impact of the new plan, which also targets refining, storage and logistics and provides no estimate of additional crude volumes or when projects will begin. In a market affected by war fears, Brent rose 4% to $113.17 per barrel on October 22 after touching a five-month high, the Associated Press reported. The following day, Brent was $117.20, up from less than $97 at the start of October, according to another report by the agency. The Associated Press cited Iranian television as saying seven oil tankers were damaged or came under attack or struck mines in the Strait of Hormuz on the night of October 21-22, adding that it could not independently verify the account. The impact of the U.S. funding remains contingent on completing project selection and implementation.