Trump says new fuel supply push will lower prices. Will it work?
Summary
President Donald Trump announced that his administration will spend $150 million using the Defense Production Act to increase gasoline and diesel production in the U.S. The goal is to lower fuel prices, which have been high recently, but experts say this effort may not reduce prices much because oil costs are set globally and U.S. fuel production is already higher than consumption.Key Facts
- The administration will use the Defense Production Act (DPA), a law that allows the government to encourage production of important goods, to boost fuel output.
- $150 million will be spent to increase refining of gasoline and diesel in the U.S.
- Gasoline has averaged over $4 a gallon and diesel over $6 recently, higher by 40% and 74% than last year.
- Crude oil prices are high due to conflicts like the Iran war and the Russia-Ukraine war, affecting global supply.
- The U.S. produces more gasoline and diesel than it consumes and even exports some fuel to other countries.
- U.S. refineries are already running at full capacity, making it hard to quickly increase fuel production.
- It can take months to increase refinery capacity, so short-term effects on prices are unlikely.
- Trade groups note that refineries are working hard despite global supply problems and fuel shortages elsewhere.
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