Trump directs $150 million to boost U.S. gasoline and diesel production

Department of Energy expects millions more gallons from U.S. refiners daily

President Donald Trump invoked the Defense Production Act on Thursday night, Oct. 22, to release $150 million to increase American refining capacity and produce more gasoline and diesel amid higher fuel prices. Trump made the announcement at a campaign rally in Sioux City, where he was stumping for Iowa Republican candidates less than two weeks before the midterm elections.

At the rally, Trump said, “And tonight, in more breaking news, my administration is using the Defense Production Act to release $150 million to increase American refining capacity to produce more diesel and more gasoline at record levels, actually.” The action invoked a Cold War-era federal law that allows the government to invest up to $150 million to boost domestic gasoline and diesel fuel production.

Trump issued a presidential memorandum to invoke the Defense Production Act, a mechanism that gives the president broad powers to provide funds to companies to expand domestic production of products deemed critical to national security. The announcement did not state how the funds would be allocated. The U.S. Department of Energy said the funding would come from the $1 billion Congress had already appropriated for critical national security energy-related projects.

According to the U.S. Department of Energy, the funding would expand domestic petroleum production, storage and logistics at refineries across the country. The department said in a statement, “By leveraging DPA authorities, DOE will help increase domestic production of gasoline, diesel, jet fuel and other petroleum products, strengthening America’s fuel supply and lowering prices for American families and businesses.” It added, “Together, this funding is expected to increase U.S. refining output by millions of gallons per day.”

U.S. Secretary of Energy Chris Wright said, “These Defense Production Act funds will be used strategically and in partnership with private industry to rapidly bolster America’s existing energy infrastructure.” He added, “By restoring energy addition policies, we will continue to unleash American energy dominance and lower costs for the American people.”

Earlier fuel policy and election context

UPI reported that diesel shortages and higher fuel costs were concerns for the Trump administration ahead of the midterm elections, with Trump seeking to help Republicans retain their slim House majority and control of the Senate.

To address global diesel shortages, the Trump administration earlier this month waived some sanctions imposed on Russia and authorized certain Russian diesel transactions. The report said the administration could purchase an amount of Kremlin-produced fuel totaling about 800,000, while Moscow could sell diesel on the global market until April 7.

At a rally in Kansas on Monday, Trump announced an $8 billion relief package for farmers called the Harvest Fuel Relief program. The package was intended to provide funds to offset diesel costs during harvest season.

Earlier this month, Trump also eased restrictions on the use of dyed diesel and directed the Treasury to defer the federal excise tax that would normally become due when such fuel was used in highway vehicles.

According to the U.S. Energy Information Administration, the average price of on-highway diesel fuel rose to $6.28 per gallon on Monday. The price was up nearly 10 cents from the previous week and $2.66 from a year earlier.