Why won’t Trump’s efforts to build more refineries lower gasoline prices?

A vehicle passes the Phillips 66 refinery in Westminster, California. President Donald Trump has called for increasing the number of U.S. refineries, but this will not resolve persistently high gasoline and diesel prices. President Donald Trump seeks to reverse decades-long declines in the number of operating U.S. refineries, viewing this as key to lowering gasoline prices—and recently convened oil executives at the White House to advance this goal. White House spokesperson Taylor Rogers stated: “President Trump and his entire energy team will continue supporting the reactivation of shuttered refineries, expanding capacity at existing refineries, and building new refineries—to lower prices and strengthen our national security.” Yet more U.S. refineries will not bring down prices in the short term—and are unlikely to be built even over the longer term. The United States has not constructed a new refinery with significant capacity since 1977, and the number of operating refineries in 1982 was roughly double today’s count. Even if a construction boom began tomorrow, it would take years before newly built refineries could produce enough gasoline and diesel to ease current price pressures. Meanwhile, U.S. oil companies show little urgency to build refineries. Although the industry is highly profitable, market participants widely recognize that current energy market disruptions are temporary. The surge in gasoline prices triggered by the wars in Iran and Ukraine will not last long enough to justify the multi-year construction timelines and billions of dollars in investment required for new refineries. John Olszewski, Director of Refined Fuels Marketing at data analytics firm Novi Labs, said: “What will the Strait of Hormuz look like four or five years from now? Assume it will be open then, and Russian refineries will have resumed normal operations. So what happens now—or next year—is actually irrelevant when planning major expansion projects.” War squeezes refining output Constrained global refining capacity—not the Iran war’s disruption of crude oil shipments through the Strait of Hormuz—is the primary driver behind this year’s fuel price surge, exerting an even greater impact. Darren Woods, CEO of ExxonMobil, remarked earlier this summer: “For the 35 years I’ve been in the refining business, there’s always been (refining) oversupply. But (now) we face refinery constraints. Therefore, pump prices are determined by supply and demand for refined products—not crude oil.” On August 18, 2026, vehicles queued at a Gazprom Neft gas station in Moscow. Russian authorities acknowledged new gasoline shortages in some regions as Ukraine intensified strikes against Russian refineries. Refineries in the Middle East and Russia have sustained damage from military attacks. Russia—long a major exporter of refined fuels—has become a net importer due to domestic fuel shortages; even Gulf facilities still operating cannot export as much product amid persistent shipping disruptions. Olszewski said rising prices are not driven by the modest recent decline in U.S. refining capacity. “The issue is that Russia and the Middle East combined have removed about 2 million barrels per day from the global market. In an already tight market, that’s a huge number.” Oil prices have surged sharply this year, recently rebounding above $100 per barrel. Although refiners’ input costs have risen, the high prices of their finished products have pushed their profit margins to record levels.

As WTI net long positions hit a 20-week high, the Trump administration is considering invoking the Defense Production Act to expand refining capacity.

With oil prices rebounding above $100 per barrel, the U.S. government is weighing use of the Defense Production Act (DPA) to expand domestic refining capacity—even as speculative funds further ramp up bullish bets on crude oil. According to Reuters, citing informed sources, the Trump administration is exploring how to leverage the Defense Production Act to boost U.S. domestic refining capacity. Related proposals were discussed during Trump’s recent meetings with nearly a dozen U.S. refiners. White House officials asked refiners how federal funding could be most effectively deployed to increase refining capacity. No final decision has yet been made, and attendees expect discussions to continue. Refinery executives told the government that, if federal funds become available, they would be better spent improving efficiency or expanding existing facilities—rather than building new refineries—given the high costs and multi-year timelines required for new construction. Rising U.S. refined product prices have especially intensified policy-level pressure. The national average diesel price has breached $6 per gallon for the first time—up nearly 60% since February, following U.S.-Israeli military action against Iran. U.S. diesel inventories also stand 13% below the five-year average for this time of year. Gasoline prices remain similarly elevated. On Friday, WTI crude fell 2.32%, yet prices held above $100 per barrel. Bullish crude positions rise to multi-month highs Latest Commitments of Traders (COT) data from the U.S. Commodity Futures Trading Commission (CFTC) shows that speculative funds continued adding bullish bets on crude oil in the week ending September 8. NYMEX WTI net long positions rose by 19,720 contracts to 139,339—reaching a 20-week high; combined net longs for Brent and WTI rose by 25,890 contracts to 411,159—a 16-week high. The refined products market likewise showed some bullish bias: NYMEX gasoline net longs increased to 92,926 contracts—the highest in roughly nine months. However, NYMEX heating oil/diesel net longs fell to 16,004 contracts—the lowest in four weeks. Natural gas markets remained bearish: NYMEX natural gas net short positions rose to 76,518 contracts—the highest in five weeks. In other words, during the week ended September 8, capital clearly increased bullish bets on crude oil and gasoline—but did not broadly favor the entire energy complex. Notably, the CFTC data cited above covers positions as of September 8, whereas WTI only subsequently broke above $100 per barrel. Thus, the timing suggests speculative funds added crude long positions in anticipation—followed by further price gains—not that the CFTC data itself directly caused the $100 breakthrough. U.S. refining capacity is nearing its limit The Trump administration’s consideration of DPA invocation to expand refining capacity reflects an underlying reality: even with increased crude oil supplies, U.S. refining infrastructure may not be able to rapidly convert more crude into gasoline and diesel.

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