Trump Puts the Pentagon and $150 Million Behind U.S. Refineries to Make More Gas and Diesel

President Trump on Thursday declared America's oil wells, refineries, pipelines, storage tanks and marine terminals "essential to the national defense," and handed the Pentagon the power to pay for more of them. The same day, the Energy Department said it will put up to $150 million into expanding U.S. refineries, with the goal of adding "millions of gallons per day" of gasoline, diesel and jet fuel, according to its announcement.

The presidential memo invokes Section 303 of the Defense Production Act, a Korean War-era law that lets Washington buy, guarantee and help finance production it decides the military can't do without. It is addressed to the Secretary of War, Pete Hegseth, as market wire First Squawk flagged within minutes. Trump signed a nearly identical determination in April, but that one went to the Secretary of Energy. Now both departments have the green light.

What the memo does

The memo is short and blunt. "Petroleum fuels the Nation's Armed Forces, industrial base, and crucial infrastructure," Trump wrote. "Without immediate Federal action, United States defense capabilities will remain vulnerable to disruption."

It finds that private industry can't add the capacity fast enough on its own "due to constrained financing, long lead times, permitting and infrastructure bottlenecks, and supply chain limitations." Then it waives the law's usual preconditions and tells the department to start "making necessary purchases, commitments, and financial instruments to enable these projects," the text says. In plain terms, the government can now promise to buy the fuel, pay in advance or chip in on a refinery upgrade the way it would for a munitions plant.

The money is already set aside. The Working Families Tax Cuts law Trump signed last year carved out $1 billion for energy projects deemed critical to national security, the Energy Department noted.

Why refineries

America isn't short of crude. It pumped about 13.6 million barrels a day in 2025, the most of any country on earth, Reuters reported. The squeeze is turning that crude into fuel. U.S. refineries were running at 98% of capacity in September, per Reuters. Think of a restaurant kitchen with every burner already lit: more groceries at the back door don't put more plates on the table.

Meanwhile, three big plants have gone dark. LyondellBasell's 264,000-barrel-a-day refinery in Houston and Phillips 66's 139,000-barrel complex in Los Angeles shut within the past two years, and Valero's 145,000-barrel Benicia refinery in California was the most recent to close, Argus reported. That's about 548,000 barrels a day of lost capacity.

"After 17 years of Democrat leaders enacting energy subtraction policies that led to the closure of refineries and more expensive refined oil products, the Trump Administration is taking action to expand our nation's refining capacity and strengthen our energy security," Energy Secretary Chris Wright said. "Thanks to President Trump, America is producing more oil and gas than ever before and thanks to President Trump, we will soon be producing more refined products as well."

Where the money goes first

The first project already has a name. At a rally in Tyler, Texas, on Oct. 13, Vice President JD Vance announced the administration "has used the Defense Production Act and we are gonna expand the refinery right here in Tyler," the Tyler Morning Telegraph reported. "We want millions of gallons of commercial-grade and military-spec fuel to come out of this refinery in addition to what it's already producing," he said, adding it would mean "hundreds of good-paying new jobs" in Smith County.

Delek US Holdings' Tyler plant processes about 74,000 barrels a day today, according to Reuters. Wright said Delek "had a very attractive proposal" to raise its output by "a meaningful amount," and that the projects will be "heavily co-funded" with industry, Argus reported.

The department also wants shuttered plants back. It is talking with every refinery closed in the past decade "to find what's the most practical one to get a refinery up and running," Wright said. Benicia is on the list, though he called California "a tough challenge" because of the state's business climate, per Argus. The new release's headline promises to "restart" an American refinery, and DOE says winners will be announced "in the near future."

It's the same playbook DOE used Monday on natural gas, when it put up to $42 million in Defense Production Act money behind the stalled 125-mile Constitution Pipeline from Pennsylvania to New York.

The pressure at the pump

The push comes as Iran's war on shipping keeps fuel expensive. Regular gas averaged $4.29 a gallon nationally Friday and diesel $6.32, according to AAA, with Brent crude near $114 a barrel after Iran's Revolutionary Guard claimed it disabled seven tankers near the Strait of Hormuz, CBS News reported.

Trump says Tehran is gaming the market. "Iran is doing everything they can to drive up the price of Oil prior to the U.S. Midterm Election," he wrote Thursday on Truth Social. "They are even making up fake hits, mines, and everything else, because more Oil is coming through the Hormuz Strait now than it did even prior to the beginning of the Conflict," he added.

Thursday's memo stacks on earlier relief. On Oct. 5 Trump ordered Treasury to defer certain federal diesel taxes through Dec. 31 and let farm-grade dyed diesel be used on highways without penalty, under Executive Order 14435.

What happens next

The War Department and DOE can now sign deals without the law's usual paperwork, and the memo is headed for the Federal Register. DOE says its refinery picks are coming soon. Every barrel those plants add is a barrel that doesn't have to cross the Strait of Hormuz.