The White House is exploring the use of the Defense Production Act to increase U.S. oil refining capacity, according to two sources familiar with the administration's plans. The proposal follows supply disruptions and price increases linked to the conflict with Iran. President Donald Trump recently met with nearly a dozen U.S. refiners to discuss how federal support could be utilized to add capacity.
The Defense Production Act (DPA) allows the president to direct industrial resources and provide financial incentives to expand production for national defense purposes. While the DPA has never been used for oil refining capacity, the administration issued a presidential determination in April 2026 authorizing its use for petroleum production, refining, and logistics. During the recent discussions, refining executives stated that federal funds would be more effective if used to improve the efficiency or capacity of existing plants rather than building a new facility.
U.S. refining utilization has reached 98%, according to the latest data, leaving little room for immediate expansion. While the U.S. remains a leading refining power, domestic capacity has decreased over the last ten years as less profitable plants closed. This trend has resulted in a concentration of refining infrastructure along the Gulf Coast. In March 2026, the president announced plans by America First Refining for a new 168,000-barrel-per-day facility in Brownsville, Texas, though it is not yet determined if that project will receive DPA funding.
The policy shift could set a precedent for using national defense authorities to intervene in the energy market during geopolitical conflicts. The administration is also seeking to increase access to Venezuelan crude through North American Blue Energy Partners, in which the U.S. government recently secured a 35% equity stake. This agreement grants the U.S. the right to purchase 20% of the company's output at production cost, which the White House claims will eventually provide millions of barrels of crude for U.S. refineries to process.
The specific timing for any DPA funding allocations has not been reported, and no final decisions were made during the recent meeting. Participants characterized the talks as ongoing. The administration is also pursuing other avenues to address fuel costs, including regulatory reform and faster permitting for energy projects. The upcoming November midterm elections provide a timeline for the administration to demonstrate its response to consumer affordability concerns.