Trump Invokes Defense Production Act for $150 Million to Lift Fuel Output as Gas Tops $4.29
Experts say the Korean War-era law is unlikely to bring prices down quickly, with U.S. refineries already running flat out and crude oil at its highest level since May.
President Trump said Thursday that his administration will invoke the Defense Production Act to spend $150 million to boost gasoline and diesel production in the United States, the latest attempt to bring down fuel prices that have squeezed households for months.
The Defense Production Act, passed in 1950, is a Korean War-era law that lets a president use loans, purchase commitments and other tools to encourage production of critical materials and goods. Congress has since broadened it to cover natural hazards, terrorist attacks and other national emergencies. The announcement followed a meeting Trump held with refiners to discuss immediate steps to bring more capacity online, a White House official told CBS News.
In a press release, the Department of Energy said the money will increase U.S. refining output by millions of gallons per day and lower prices for Americans. A White House official said the funds will help expand capacity and modernize existing infrastructure, which is much faster than building a new refinery.
The pressure is real. Drivers have paid more than $4 a gallon on average for gasoline over the last three months, according to the Energy Department. On Friday the national average stood at $4.29 for gasoline and $6.32 for diesel, AAA said. Those prices are up 40% and 74%, respectively, from a year earlier. Crude oil is climbing as well. Brent crude, the international benchmark, was $116 a barrel Friday, up 2.6%, and West Texas Intermediate, the U.S. benchmark, was around $103, up 3%. Both are at their highest levels since May this week.
The announcement comes as polling shows a majority of Americans are pessimistic about the economy amid a growing affordability crunch, with the midterm elections just over a week away.
Energy experts were skeptical that the move would help soon. "I don't think that's really going to have any impact," Patrick De Haan, a petroleum expert at GasBuddy, told CBS News in an email. Tom Kloza, chief energy adviser for Gulf Oil, said the funds could speed up some refining expansions but that short-term benefits are unlikely. "There is no slack in U.S. refining, so production can't be added regardless of political will," he said. Kloza noted that bringing refinery units back into service typically takes months and calendar quarters.
The deeper problem is that oil is priced on a global market, and the war with Iran and the Russia-Ukraine conflict have disrupted shipments. The United States actually produces more fuel than it uses. It makes about 9.5 million barrels of gasoline per day and consumes about 8.9 million. It produces around 5.3 million barrels per day of distillate fuel, which includes diesel, against consumption of about 3.6 million, and it exports roughly 1.4 million barrels of diesel a day, Kloza said.
A spokesperson for the American Fuel & Petrochemical Manufacturers, which represents refiners, said the group appreciated the administration's focus on refineries. The country's 128 operating refineries, the spokesperson said, "are running all-out to keep Americans supplied and the global economy moving despite major disruptions and actual fuel shortages in other parts of the world."
