US Mulls Wartime Powers to Shore Up Refining Capacity as Prices Soar

The Biden administration is exploring the use of the Defense Production Act (DPA) to expand domestic oil refining capacity, according to sources familiar with the discussions. The move, reported by Reuters, underscores growing concerns about U.S. vulnerability to global supply shocks and sustained high fuel prices.

Running at Full Throttle

American refineries are already operating near their limits, with utilization rates hitting 98%. Despite this, supply struggles to meet demand. The national average price for diesel fuel recently surpassed $6 per gallon for the first time, while gasoline prices remain elevated. This tight market has turned refining capacity into a critical economic and national security issue.

Industry Pushback and Government Deliberation

The potential use of the DPA—a Korean War-era law typically reserved for national defense emergencies—was discussed at a recent meeting between administration officials and executives from nearly a dozen major refining companies. Industry leaders argued that any federal support would be more effective if directed toward improving efficiency at existing facilities or expanding current sites, rather than funding costly, multi-year projects to build brand-new refineries.

No final decision has been made. A White House official stated that boosting refining capacity is a priority, and the administration is evaluating a range of options.

Potential Avenues Forward

Beyond the dramatic step of invoking the DPA, which is seen as a measure of last resort, the administration is considering several alternative approaches:

  • Regulatory Streamlining: Accelerating permitting processes for new projects or equipment upgrades.
  • Investment Incentives: Using fiscal tools to encourage modernization of existing refineries.
  • Improved Coordination: Enhancing federal collaboration with state and local permitting authorities.

The core objective remains the same: to strengthen America's energy resilience and independence in an increasingly volatile global landscape. This internal debate signals that energy security is now being framed in starkly strategic terms.