Trump weighs emergency powers as diesel tops $6, threatening economy ahead of midterms

• National average diesel prices have surpassed $6 per gallon for the first time, up 60% from one year ago.
• The Trump administration is considering using the Defense Production Act to expand U.S. oil refining capacity.
• Ukrainian drone strikes on Russian refineries and the Iran conflict have disrupted global fuel supplies.
• Higher diesel costs are driving up prices for food, farming and nearly all consumer goods.
• The White House faces mounting pressure to contain fuel costs before the November midterm elections.

With national average diesel prices exceeding $6 per gallon and regular gasoline hovering above $4.20, the Trump administration finds itself at a critical juncture. Fuel costs have surged amid a global refining squeeze fueled by the Iran conflict and Ukrainian strikes on Russian refineries. The White House is now exploring whether to invoke the Defense Production Act—a tool never before used for refining capacity—to expand domestic fuel production. The stakes are high: diesel powers the trucks, trains and farm equipment that move nearly every product Americans consume, and price spikes threaten to ripple through the economy ahead of the November midterm elections.

White House considers extraordinary measures

According to Reuters, the proposal to use the Defense Production Act emerged during a recent meeting between President Donald Trump and nearly a dozen U.S. refiners. White House officials sought to determine how federal support could best expand capacity. No final decisions were made, and discussions are expected to continue.

The Defense Production Act, a tool of last resort, grants the president broad authority to direct industrial resources and provide financial incentives for companies to expand production of materials deemed important to national defense. The current discussions build on an April presidential determination authorizing support for domestic petroleum production, refining and logistics.

Taylor Rogers, a White House spokeswoman, stated that expanding refining capacity remains a top priority, with officials evaluating regulatory reform, faster permitting and additional investment.

However, U.S. refineries are already operating at near-record levels, with utilization reaching 98%. Refining executives told officials that federal money would be better directed toward making existing plants more efficient rather than financing entirely new refineries, which would take years and cost considerably more.

Ukraine conflict and Iran war drive supply crunch

President Trump has attributed the diesel spike directly to Ukraine’s military strategy. He urged Ukrainian President Volodymyr Zelensky to stop striking Russian refineries, stating that Ukraine’s attacks on fuel facilities are hurting the global economy.

Ukrainian drone strikes have targeted Russian oil and gas infrastructure in recent months, aiming to cripple Moscow’s largest revenue source. Russia responded by banning diesel exports through September. Simultaneously, the Iran conflict has disrupted Gulf refining operations, contributing to an 8% drop in global diesel supply, according to CNBC.

The convergence of these factors has pushed diesel prices to historic levels. AAA data shows the national average at $6.05 per gallon, up more than 60% from $3.70 one year ago. The previous record of $5.82 occurred in June 2022 following Russia’s initial invasion of Ukraine.

Economic consequences mount

The diesel surge carries profound implications for the American economy. Diesel engines power the freight sector that transports more than 70% of the nation’s freight by weight, according to the American Trucking Associations. Trucks ship over 80% of agricultural products and more than 90% of dairy, fruit, vegetables and nuts.

The Independent Grocers Alliance reports that fuel can account for roughly 15% to 30% of the total cost of some food products. Higher diesel costs fueled grocery inflation in summer 2022, when annual food price increases peaked at 13.5%.

Farmers face particular hardship as harvest season begins. In Iowa, the top corn-producing state, diesel costs $5.88 per gallon, up 66% from one year ago. In California, diesel averages approximately $8 per gallon.

Brown University’s real-time tracker estimates that higher diesel prices have added $46.7 billion to fuel costs since the Iran war began, equivalent to about $357 per U.S. household.

Political pressure intensifies

The Trump administration is under growing pressure to demonstrate it can contain surging fuel costs before voters head to the polls. President Trump acknowledged this week that oil prices likely will not decline until after the November midterm elections.

The White House has pursued multiple policy levers. Jones Act waivers and Strategic Petroleum Reserve releases have already been deployed. Additional options include export restrictions and waiving federal fuel taxes.

The administration is also seeking to increase access to foreign oil supplies. Trump recently secured a 35% U.S. government equity stake in North American Blue Energy Partners, a Venezuelan oil company with rights to develop 17 oil fields containing about 65 billion barrels of proven reserves. The agreement grants the U.S. government rights to purchase Venezuelan crude, including 20% of the company’s output at production cost.

Test case emerges in Texas

A proposed new refinery in Brownsville, Texas, has emerged as a test case for Trump’s call to expand domestic refining capacity. America First Refining plans to build a 168,000-barrel-per-day facility at the Port of Brownsville, which Trump announced in March as the first new U.S. refinery in nearly 50 years.

The project has ties to the Trump family and administration. Donald Trump Jr. is a passive minority investor, according to company and investor disclosures. Cantor Fitzgerald, whose founder Howard Lutnick serves as Trump’s commerce secretary, is acting as financial adviser.

It remains unclear whether the Brownsville project would receive Defense Production Act funding.

Outlook and implications

The diesel crisis represents a convergence of geopolitical conflict, infrastructure constraints and economic vulnerability. While U.S. crude oil production is on pace for a record high in 2026, refining capacity has declined over the past decade as unprofitable plants shut down, concentrating operations on the Gulf Coast.

GasBuddy’s head of petroleum analysis warned of a “costlier holiday season,” noting that diesel prices could continue climbing as geopolitical tensions persist. The Energy Information Administration raised its diesel forecast for 2027, now projecting an average of $4.40 per gallon, 33 cents higher than previously estimated.

The fundamental challenge facing the administration remains: tight global supplies and strong demand are keeping fuel prices elevated, even as domestic refineries operate at near-maximum capacity. Whether invoking the Defense Production Act can meaningfully address these structural constraints in the short term remains an open question—one with significant implications for American households, farmers and the broader economy.

Sources for this article include:

ZeroHedge.com

NewNationNow.com

WHBL.com

NYPost.com