White House Weighs Defense Production Act as U.S. Refineries Maxed Out

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The White House is considering using the Defense Production Act to add U.S. refining capacity, with American refineries already running at 98% capacity and diesel prices above $6 per gallon for the first time.

The proposal was discussed during President Donald Trump’s recent meeting with nearly a dozen U.S. refiners, according to Reuters. No decision has been made, and discussions are expected to continue.

Refining executives told administration officials that federal money would produce more barrels faster if it were used to expand existing plants or improve refinery efficiency. Building an entirely new refinery would cost billions and take years.

The Defense Production Act gives the president authority to provide financial assistance and direct industrial resources toward materials and capacity considered necessary for national defense.

Trump laid the groundwork in April, when he issued a presidential determination declaring domestic petroleum production, refining and logistics capacity essential to national defense. The order authorized purchases, purchase commitments and financial instruments under Section 303 of the DPA to increase that capacity.

U.S. refiners have little spare room today. Refinery utilization reached 98% in late August after spending three consecutive months above 95%, the longest such stretch since 2000.

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