$150 Million to Expand U.S. Refining as Trump Activates Defense Production Act
Key Facts
On October 22, U.S. President Donald Trump issued a presidential determination under Section 303 of the Defense Production Act to expand U.S. oil production, refining and transportation capacity. The White House classified these capabilities, including pipelines, storage facilities and marine terminals, as essential to national security. On the same day, the Energy Department announced plans to provide up to $150 million under Title III of the act to support refinery production, storage and logistics. The move turns an earlier announcement of intent to use the act into formal action, directing support toward domestic supply capacity. It comes as the average U.S. on-highway diesel price reached $6.276 per gallon in the week of October 19.
The White House presented the determination as a measure to strengthen defense readiness, saying financing constraints, lengthy lead times, permitting and infrastructure bottlenecks, and limited supply chains prevent the private sector from providing the required capacity in time. Under the determination, Trump exempted the expansion of domestic oil capacity from requirements in paragraphs 303(a)(1) through 303(a)(6). Its scope covers production, refining and logistics, from exploration and production to transportation, storage and marine terminals. The Energy Department said the planned funding aims to raise U.S. refinery output by millions of gallons per day and support production of gasoline, diesel, jet fuel and other petroleum products. The announcement did not specify a more precise increase.
U.S. Energy Information Administration data show that U.S. refineries operated at an average of more than 95% of capacity between May and September 2026, the highest level for those months since 1998. The agency said refinery output reached its highest level since 2019, while refining capacity has declined 4% since that year. During the first three weeks of October, refinery runs fell from their summer peak but remained above the seasonal average for 2021–2025. Crude oil inputs to refineries were 16.5 million barrels per day in the week ended October 16, compared with 17.451 million in the week ended September 11. Data for the same week show U.S. field crude production at 13.269 million barrels per day, after 13.979 million in the week ended October 2.
On prices, the average U.S. diesel price rose to $6.276 per gallon in the week of October 19, up $0.097 from the previous week. This comes as disruption continues in the Strait of Hormuz, a vital oil-shipping route, but the presidential determination did not formally link the action to the strait, instead focusing on national defense requirements and domestic capacity. The Associated Press reported that Tehran said seven oil tankers caught fire or were damaged overnight, while noting that it could not independently verify the reported attacks. The agency added that tankers continued to carry oil through the strait under U.S. military protection despite escalating attacks. Fuel-price pressure is thus converging with efforts to increase domestic capacity, while the regional shipping route remains a factor in the background of the oil market.
The Energy Department is still selecting the projects that will receive funding. It said the selection process is underway and results would be announced “in the near future.” Trump had announced on October 9 his intention to use the Defense Production Act to increase oil and fuel supplies, before the presidential determination was issued on October 22. EL7 coverage also reported on October 23 that up to $150 million had been directed toward expanding U.S. refinery capacity. Because funding is tied to project selection, the announced impact on refinery output remains expected, and the department has not given a specific start date for implementation. The next announced step is the release of the selected projects.