Expansion of U.S. Refinery Capabilities Announced

No president has the power to just create a new refinery out of thin air, not even Joe Biden. However, a president, along with their energy secretary, can facilitate the expansion or reactivation of existing ones. This week, Donald Trump and Chris Wright made headlines by taking steps in that direction.

On Thursday, the Department of Energy revealed plans to allocate up to $150 million in funding from the Defense Production Act (DPA) to increase petroleum production, storage, and logistics at qualifying refineries. This funding is part of the $1 billion that Congress designated for national security energy projects under last year’s Working Families Tax Cuts legislation. On the same day, Trump signed a determination stating that domestic refining, pipelines, storage, and marine terminals are “essential to the national defense.”

Wright was quite direct, attributing the closure of refineries and the rise in refined oil prices to “17 years of Democrat leaders enacting energy subtraction policies.”

So, is this a wise decision? The statistics certainly suggest it might be. With diesel prices exceeding $6.00 per gallon and gasoline around $4.29 per gallon, there’s a clear call for innovative responses. Moreover, U.S. refiners are operating at nearly full capacity; in August, capacity reached 97%, and it has remained above 93%. There’s hardly any flexibility left in a system that desperately requires some breathing room.

This lack of flexibility has developed over many years. According to EIA data, U.S. operable capacity decreased by about 263,000 barrels per day from January 2025 to January 2026. Major refineries like LyondellBasell’s in Houston have shut down, while California regulators successfully closed Phillips 66’s Los Angeles complex and Valero’s Benicia plant. All these closures happened due to economic factors and regulations, not because there’s been a reduced need for fuel in America.

However, a touch of realism is necessary here. Wright openly acknowledged that restarting refineries is challenging, pointing out that reopening the Benicia plant is “a tough challenge,” especially given the California government’s adversarial stance toward the industry. “We’re aiming to reopen as many refineries as possible,” he mentioned during a Houston address, but he added, “I’m not saying all these are going to happen.”

The Department of Energy has indicated that the selection process for the funding is still underway, and no recipients have been finalized yet. Currently, the only identified project is an expansion of Delek’s refinery in Tyler, Texas, which Vice President JD Vance announced on October 13, though specifics regarding costs or capacity goals have not been disclosed.

Consequently, it’s unrealistic to anticipate any significant relief at gas stations by Thanksgiving or even Christmas from this policy decision. Expansions and restarts are lengthy processes. Even with the industry’s backing, a $150 million investment doesn’t stretch very far in such a capital-heavy sector. What’s notable is that this move signals a shift in Washington’s attitude; it reflects a desire for increased domestic fuel production, contrasting sharply with the policies seen in most recent U.S. administrations, except for the Trump years.

The broader significance here is the precedent being set. Using DPA authority to classify refining as critical infrastructure marks a departure from decades of federal policy that viewed refineries as diminishing assets, overwhelmed by regulations and taxes. If this initiative leads to quicker permits and private investments, that would represent a substantial achievement.

Yet, it’s important not to confuse this action with a permanent fix, as the main contributors to today’s high fuel prices are international events. The ongoing Iran War, for instance, has turned the Strait of Hormuz into a dangerous area, with Brent crude prices soaring to $113 per barrel after reports of attacks on tankers. Additionally, Ukraine’s efforts with drone attacks have reduced Russia’s diesel exports significantly, removing the world’s leading diesel supplier from the market.

Resolving these international conflicts would potentially provide greater benefit to American drivers and truckers much sooner than any federal funding or regulatory adjustments could offer. Ultimately, a sustainable solution will require building more refining capacity domestically, which hinges on permitting reforms and curtailing the ongoing regulatory war against refiners.

President Trump and Secretary Wright are rightly leveraging every available option. It’s a timely and appropriate response. However, genuine relief at gas stations will only materialize when global conflicts cease, and the nation is able to build new refineries again.