Trump invokes Defense Production Act to boost domestic oil refining capacity

President Trump invoked the Defense Production Act on October 22, 2026, declaring petroleum production and refining essential to national defense, potentially opening access to $1 billion in funding from 2025 legislation for energy projects. The move comes as diesel prices remain elevated following US-Israel attacks on Iran in late February 2026 and ahead of November 3, 2026 elections, with a Reuters/Ipsos poll showing only 36% approve of Trump's economic handling.

Defense Production Act invocation

• ▪Donald Trump signed legislation in 2025 that included $1 billion in Defense Production Act funding for energy-related projects deemed critical to national security
• ▪Donald Trump invoked part of the Cold War-era Defense Production Act on October 22, 2026, allowing Donald Trump to provide financial incentives for oil-related activities, pipelines and storage of liquid fuels
• ▪US President Donald Trump determined on October 22, 2026 that petroleum production, refining, and related activities are essential to national defense

Global energy supply disruptions

• ▪Ukrainian attacks on Russian refineries have exacerbated fuel shortages
• ▪The conflict stemming from the US-Israel attack on Iran in late February 2026 has limited energy shipments globally
• ▪Prices for crude oil and diesel have surged since the US and Israel attacked Iran in joint action at the end of February 2026

November election risks

• ▪The surge in crude oil and diesel costs poses a risk for Donald Trump in the November 3, 2026 elections
• ▪A Reuters/Ipsos opinion poll that closed on October 19, 2026 shows just 36% of Americans approve of Donald Trump's handling of the economy
• ▪Republicans are trying to maintain control of both chambers of Congress in the November 3, 2026 elections

US oil production capacity

• ▪The US averaged around 13.6 million barrels of daily crude production in 2025
• ▪The US is not able to provide enough energy services in a timely manner due to constrained financing, long lead times, permitting and infrastructure bottlenecks, and supply chain limitations
• ▪The US was the largest crude producer worldwide in 2025

Refinery funding incentives

• ▪The presidential memo signed by President Trump on October 22, 2026 did not mention specific projects that could be funded under the Defense Production Act
• ▪Vice President JD Vance said the Trump administration would use the Defense Production Act to expand capacity of a Texas refinery owned by Delek US Holdings