Trump Uses Wartime Law to Boost Oil Refining by 2027

President Donald Trump invoked the Defense Production Act in five new orders on April 20 to channel federal funds into petroleum refining, coal, and natural gas projects, aiming to bolster what the administration calls a strained national energy supply.

"President Trump is abusing emergency authorities and wasting taxpayer resources through unprecedented abuse of the Defense Production Act to promote his politically favored fossil fuel projects," Tyson Slocum, energy director at consumer watchdog Public Citizen, said (8).

The move follows President Joe Biden’s 2022 use of the same act to accelerate clean energy manufacturing (3). While Brent crude traded at $94.51 a barrel after the announcement, U.S. gasoline prices remain above $4 a gallon, a pain point for voters ahead of November's midterm elections (3).

The orders empower the Department of Energy to directly invest in and streamline permitting for energy infrastructure, but are unlikely to lower pump prices before 2027. The core issue remains whether government intervention can shield the U.S. from global energy shocks, a question both administrations have tried to answer with different technologies.

The five determinations declare that ensuring resilient domestic production in these sectors is “central to United States defense readiness,” according to the White House (2). This action allows the Energy Department to make direct purchases, offer financial support, and use other tools to overcome market and regulatory barriers that have slowed project development. Companies like Sky Quarry Inc. (NASDAQ: SKYQ), which operates Nevada's only refinery, highlighted the move as a potential boon for domestic capacity in a constrained Western U.S. fuel market.

A Familiar Tool for Different Ends

This is not the first time a president has turned to the Korean War-era law to pursue an energy agenda. In 2022, President Joe Biden invoked the DPA to increase domestic production of clean energy technologies, including solar panels, heat pumps, and equipment for clean hydrogen (4). The justification was similar: then-Energy Secretary Jennifer Granholm stated the nation’s clean energy supply chain was “over-reliant on foreign sources and adversarial nations.”

Trump’s orders, however, focus squarely on hydrocarbons. The directives target coal-fired power plants, gas turbine manufacturing, petroleum refining facilities, and critical grid components like transformers (6). The administration argues that an “aging and constrained electric grid infrastructure” poses a direct “threat to national defense” (7), and that baseload power from coal is essential for defense installations and new power-hungry technologies like AI.

Long-Term Strategy vs. Short-Term Prices

Despite the executive action, American drivers are unlikely to see immediate relief. The U.S. Energy Information Administration (EIA) forecasts oil prices will remain above $90 a barrel through mid-2026, with gasoline prices peaking around $4.30 a gallon this spring (10). The primary drivers are ongoing geopolitical conflicts, not a lack of domestic policy tools.

The long-term impact could be more significant. By authorizing federal support, the administration aims to de-risk private investment in major infrastructure like pipelines, LNG export terminals, and refinery upgrades. World Oil reports that this could ease pricing pressures in 2027 and beyond by increasing domestic supply (11).

The move has drawn sharp criticism from environmental groups and consumer watchdogs. Public Citizen labeled the directives "a wish list for the oil, gas, and coal industries, who are already enjoying record profits under Trump's Energy Unaffordability Agenda" (8). The broader critique, noted by Newsweek, is that using a wartime statute for what is essentially industrial policy "blurs the line between emergency authority and routine energy policymaking" (9).

This article is for informational purposes only and does not constitute investment advice.