Trump directs up to $150 million in support to expand U.S. refinery capacity
Key Facts
U.S. President Donald Trump designated oil production, refining, transportation and storage capacity within the United States as essential to national defense, directing that his decision be implemented through purchases, commitments and financial tools, according to a White House memorandum issued on Oct. 22. On the same day, the U.S. Department of Energy announced plans for up to $150 million in funding under Title III of the Defense Production Act. The funding is intended to expand oil production, storage and logistics at U.S. refineries. The department said the aim is to increase production of gasoline, diesel, jet fuel and other petroleum products. It estimated that the funding could raise U.S. refining capacity by “millions of gallons per day,” without announcing which projects would receive it.
The decision reflects a focus on refining capacity and fuel supplies: the White House memorandum listed oil, refining, transportation and storage activities among capabilities important to national defense, while the Energy Department linked the funding to expanding production, storage and logistics at refineries. Reuters reported that the memorandum did not name specific projects that could receive funding and that it allows financial incentives for oil, pipeline and liquid-fuel storage activities. The department had said project selections were still underway and that it would announce them “in the near future.” The announced funding ceiling therefore remains a spending framework, while the department has yet to identify recipients or when projects will begin. The decision alone also does not turn the projected increase in production into volumes realized in the market.
U.S. inventory data show mixed movements across fuel types. Commercial crude inventories, excluding the Strategic Petroleum Reserve, fell to 412.517 million barrels in the week ended Oct. 16, from 415.577 million the previous week. Gasoline inventories declined to 205.310 million barrels from 208.262 million. By contrast, distillate inventories rose to 104.286 million barrels from 102.611 million over the same period. Distillates include fuels such as diesel, while the Energy Information Administration reports these figures as weekly inventory levels; these movements alone do not point to a uniform trend in petroleum-product supplies.
In the refining sector, the Energy Information Administration said refinery runs during the first three weeks of October fell from their summer peak but remained above the five-year seasonal average for 2021 to 2025. That coincided with a separate move to support supplies: on Oct. 23, the Energy Department authorized an emergency exchange of up to 400,000 barrels of crude from the Strategic Petroleum Reserve for the Phillips 66 refinery in Lake Charles, Louisiana, after a disruption to its crude supply. The department said crude from the West Hackberry site would be delivered to the refinery immediately, and that the exchange was intended to support continued production of transportation fuels in Louisiana and surrounding areas. The company will return the crude along with additional barrels under the exchange arrangements. On Oct. 21, the department also announced an exchange of up to 315,000 barrels of low-sulfur heating oil from the Northeast Home Heating Oil Reserve, setting Oct. 27 as the deadline for bids and Nov. 13 as the date for completing the transfer or delivery.
Oil prices rose on Oct. 23 compared with the previous session’s close. EL7 data showed Brent closing at $117.26 a barrel, versus $113.17 on Oct. 22, while West Texas Intermediate closed at $103.13, compared with $99.47. In its report on the session, the Associated Press said Brent rose 3.1% to $116.72 a barrel, its highest level since June 2022, and that higher oil prices weighed on U.S. stocks. The closing price in EL7 data differs from the settlement price reported by the news agency, so each reading is attributed to its source. Prices rose the day after the presidential memorandum was announced, but the available data do not attribute the market move to the decision alone.
Vice President J.D. Vance said the previous week, according to Reuters, that the administration would use the Defense Production Act to expand the capacity of a Texas refinery owned by Delek US Holdings. The next weekly Energy Information Administration inventory report is scheduled for Oct. 28. The American Petroleum Institute report is also scheduled for Oct. 27, according to the schedule in the correction regarding the dates. The Energy Department said it would announce which projects would receive funding later, without specifying a date. The upcoming announcements will clarify the scope of projects benefiting from the funding, while the announced increase in refining capacity remains a department projection until the projects begin and their results are measured.