White House weighs Defense Production Act to boost US refining capacity
In brief
- Diesel prices crossed $6 per gallon nationally for the first time, signaling tight refining capacity
- US refinery utilization hit 98%, leaving no margin for maintenance or weather disruptions
- White House weighing Defense Production Act powers to incentivize refining expansion
- America First Refining proposed 168,000 barrel-per-day facility in Brownsville, Texas—first new US refinery in 50 years
- Refining executives favor efficiency upgrades at existing plants over new construction
Capacity Crisis
Between 2019 and 2023, the US lost more than a million barrels per day of refining capacity. That erosion has left the system vulnerable. The industry generally considers refinery utilization above 95% to be uncomfortably tight, and 98% leaves essentially no margin for weather events, maintenance work, or unexpected outages.
Any disruption triggers immediate price spikes when the system runs that hot. Fuel costs ripple through transportation, agriculture, and manufacturing. Policymakers see the pinch.
DPA Powers and the Executive Push
On September 8, 2026, a follow-up executive order expanded DPA powers specifically for energy-related authorities. Three days later, reports emerged that the White House was in active discussions about deploying those powers toward refining capacity. DPA Section 303 allows the government to subsidize and incentivize production of materials deemed critical for defense.
The mechanism is straightforward in theory. In practice, refining is capital-intensive and long-cycle. Executives who've sat down with White House officials have offered pragmatic counsel.
"Refining executives who participated in White House discussions apparently pushed a pragmatic message: focus on efficiency upgrades at existing facilities rather than constructing entirely new refineries."
New Capacity on the Horizon
America First Refining has proposed building a 168,000 barrels-per-day refinery in Brownsville, Texas. If it moves forward, it would be the first new refinery built in the US in nearly 50 years. The Brownsville project has already secured a 20-year offtake agreement with Reliance Industries, the Indian conglomerate, signaling commercial viability.
On the upstream side, the Santa Ynez Unit, which had been dormant, resumed production in March 2026 and is expected to add roughly 50,000 barrels per day to domestic output. That helps. But closing the gap between near-term supply and demand pressure will require both incremental gains and structural investment.
The White House weighing DPA levers suggests Washington sees energy security and fuel prices as linked to broader economic and geopolitical stability. Whether subsidies or incentives can move the needle fast enough remains an open question.
