The federal government is stepping in to allocate funds aimed at reviving a closed American refinery and expanding others, as families grapple with rising fuel prices.
The Energy Department disclosed on Thursday that it plans to invest up to $150 million through the Defense Production Act. This funding is intended to enhance oil production, storage capacity, and fuel distribution at U.S. refineries. On the same day, President Trump issued a determination asserting that the nation’s refining and logistics capabilities are essential for national defense.
“These Defense Production Act funds will be used strategically and in cooperation with private industry to quickly strengthen America’s existing energy infrastructure,” Energy Secretary Chris Wright stated in the announcement.
According to a representative from the American Fuel & Petrochemical Manufacturers (AFPM), “The entire world has witnessed this year how crucial refineries are to national security and the economy, with U.S. refineries standing out as prime examples.” The spokesperson expressed gratitude for the Trump administration’s recognition of the significance of American fuel refineries.
Matt McManus, a senior fellow at the National Center for Energy Analytics, added that the Defense Production Act sends a clear message to the energy sector and financial markets about the strategic priority of energy supply, which may help attract more investments.
The Energy Department commented that it had no additional information beyond its initial release. Phillips 66 chose not to respond, while Valero, Delek US Holdings, and LyondellBasell did not immediately provide comments when contacted.
Diesel fuel prices averaged $6.32 a gallon nationally as of Friday, a significant increase from $3.63 a year ago, according to the American Automobile Association.
The department has yet to specify which refineries will benefit from the funding, noting that announcements will be made shortly.
Vice President JD Vance indicated the administration intends to utilize the law to expand a Delek US Holdings refinery located in Texas.
America First Refining, which is in the process of developing a new refinery, did not confirm whether it would apply for these funds. John Calce, the chairman and founder, mentioned their focus remains on advancing the first new major U.S. refinery in over five decades, with operations expected to begin in 2029.
The determination directed to the secretary of war explains that the U.S. industry “cannot reasonably be expected to provide these capabilities in a timely manner due to financing constraints, long lead times, permitting delays, and supply chain issues,” according to the White House.
Congress allocated $1 billion through the Working Families Tax Cuts law for energy initiatives deemed crucial for national security, as indicated by the Energy Department.
McManus commented on the current market conditions, referencing constraints on refineries in the Persian Gulf and suggesting that while this funding may not be an immediate solution, it could help meet growing needs in the medium term. Supporting his views, Mark Mills, the center’s executive director, agreed.
However, Neil Atkinson, another senior fellow at the center, observed that $150 million might be insufficient for an industry that typically requires hundreds of millions to billions for significant adjustments. He noted that U.S. refineries are currently operating at around 94 percent capacity, with global market dynamics influencing U.S. prices.
According to the AFPM spokesperson, “Our nation’s 128 operational refineries produce more fuel than we consume, and they are operating at full capacity to ensure supply amid disruptions and shortages worldwide.”
The trade group also mentioned that they are not privy to specific refinery upgrades or improvements that haven’t been made public yet.
“Our priority should be supporting U.S. refineries and fostering a stable investment environment while ensuring efficient fuel distribution,” the spokesperson stressed.
An American Petroleum Institute representative acknowledged the administration’s actions, stating that a robust domestic energy system is crucial for national energy security.
Valero has completely shut down all processing units at its Benicia, California refinery as of April. The California Energy Commission and California Governor Gavin Newsom’s office have not provided comments on the matter.
Earlier in April, Trump had signed a similar determination concerning refining capacity addressed to the energy secretary.
As reported, the U.S. averaged about 13.6 million barrels of crude oil production daily in 2025, leading all other nations.
