President Donald Trump has invoked a Cold War-era law in an effort to boost oil production and lower energy prices.
In a presidential memorandum issued Thursday, Trump determined that petroleum production, refining, and related activities are essential to national defense under the 1950 Defense Production Act. The determination follows Trump’s declaration of a national energy emergency in January 2025.
“Ensuring resilient domestic petroleum production, refining, and logistics capacity is central to United States defense readiness,” the memo reads. “Without immediate Federal action, United States defense capabilities will remain vulnerable to disruption.”
The memo comes as the price of gas and diesel has soared across the country amid supply disruptions caused by the U.S. and Israel’s war against Iran. Brent crude futures rose 1.2% to $114.47 a barrel early Friday, extending gains after Thursday hit a five-month high. U.S. diesel pump prices averaged $6.32 a gallon, slightly higher than Thursday but below the September record, according to AAA. The high energy prices, and related inflation, have become a defining issue for voters in the coming midterm elections.
Here’s what to know.
What does the memo mean for energy production?
The memo means that energy production shortfalls are seen as a national defense risk.
The memo invokes Section 303 of the Defense Production Act, a law that allows the federal government to intervene in private industry for national defense. Section 303 allows the President to make purchases, purchase commitments, provide financial support and equipment, and expand production through other measures.
The memorandum also removes certain Section 303 requirements through an emergency waiver, including ordinary congressional notification and authorization constraints.
While the memo does not specify which projects could be funded, Vice President J.D. Vance said last week that the Administration would use the Defense Production Act to expand capacity at a Delek U.S. Holdings-owned refinery in Texas.
Without taking action, the memo said, U.S. industry would be unable to provide sufficient energy services in a “timely manner due to constrained financing, long lead times, permitting and infrastructure bottlenecks, and supply chain limitations.”
Has the Defense Production Act been invoked before?
Enacted during the Korean War, the Defense Production Act was first used to expand domestic industries in critical materials, such as aluminum and titanium, for national defense.
Section 303 of the act was also used during the pandemic to fund domestic production of medicines and vaccines. Former President Joe Biden also invoked the statute to support clean energy manufacturing and supply chains, including minerals used in electric vehicle batteries and the production of of energy-efficient heat pumps and insulation.
In April, more than a month after Iran began disrupting shipping through the Strait of Hormuz in retaliation for U.S.-Israeli Feb. 28 strikes, Trump invoked the act to declare petroleum, natural gas, coal, electricity grid, and other energy infrastructure essential to national defense. Citing April’s natural gas determination, the Department of Energy on Monday committed up to $42 million to advance the proposed Constitution Pipeline linking Pennsylvania and New York. The department also announced up to $50 million last week for transmission upgrades in Virginia and West Virginia, citing April’s grid determination.
Last year, Trump signed legislation providing $1 billion for Defense Production Act activities, including energy projects deemed critical to national security.
Trump’s use of Section 303 of the act for fossil fuel projects has drawn criticisms from environmentalists, with the Center for Biological Diversity calling the April memoranda, which waived congressional notification, “unlawful.” Nevertheless, the statute expressly includes energy production and construction in its definition of national defense.
How else has Trump tried to lower energy prices?
The Trump Administration has pursued a number of other measures aimed at lowering energy prices since the Iran War began. Earlier this month, Trump signed an executive order temporarily expanding access to tax-exempt dyed diesel, which is typically reserved for off-road farm and construction vehicles. The Group of 7 countries, including the U.S., also agreed to release 100 million barrels of diesel and crude oil reserves to the world over four months.
In August, the Administration extended the Jones Act waiver for another 90 days, allowing foreign-flagged ships to transport oil and certain other commodities between U.S. ports.
Trump also announced an agreement with Putin earlier this month to import diesel from Russia, alongside temporary sanctions relief. The deal has faced significant backlash from lawmakers.
For many of these measures, industry analysts and stakeholders have said the reduction in energy prices is likely to be limited and possibly short-lived. Analysts estimated that the Jones Act waiver was expected to reduce gasoline prices by only pennies per gallon. Capital Economics economist Hamad Hussain said the reserve release could lower diesel prices temporarily, but would not resolve the underlying supply crunch. And analysts warned that the dyed diesel measure would have a limited effect on most consumers since the tax-exempt fuel isn’t widely available at ordinary commercial pumps. A Council on Foreign Relations analysis also suggested that damaged Russian refining capacity may make a near-term effect of the Russia deal on diesel markets unlikely, although Trump said the agreement would supply more than 300,000 tons of diesel to U.S. and global markets immediately.
Meanwhile, oil exports from the Middle East topped prewar levels last week, marking a rebound in regional oil shipments despite continuing security risks. Ships sailing through the Strait of Hormuz, however, still face attacks from Iran, while the Bab el-Mandeb Strait near Yemen has been threatened by the Houthi rebels. Analysts previously told TIME in June that the risk of further attacks and damage to facilities could delay a full-scale recovery.
Thursday’s memorandum could support investment in fuel capacity, but it’s uncertain how quick or measurable an effect it will have on energy prices. Gas prices still depend heavily on globally traded crude, according to the U.S. Energy Information Administration, although they can be influenced by domestic refining and distribution conditions. The U.S. was the largest crude producer globally last year, averaging 13.6 million barrels of crude a day.
Analysts warned, after the April memorandum, that federal support would not necessarily translate into immediate price relief.
“Until the pipes are in the ground and the fuel is flowing or transported, it may not be able to be called a true structural shift,” Cyrus Brooks, director of marketing at energy research firm RBAC, wrote in April.
Still, Brooks said of the April action that federal recognition of energy as important to national security could support important infrastructure investment, potentially relieving a bottleneck in domestic fuel production, refining or transportation.
“Energy security seems to be the brightest neon sign flashing,” he wrote. “Not because it’s everything, but because nothing works without it.”