Nate Vance: Trump’s refining push is a good start. But is it enough?

This is a guest op-ed for The Correspondent by Nate Vance.

Nate Vance is a retired U.S. Marine and a first cousin of Vice President JD Vance. He spent nearly three years in Ukraine as a volunteer fighter and previously worked in the oil industry. He currently works in Kyiv for the R. T. Weatherman Foundation.

President Trump has invoked the Defense Production Act with the aim of expanding petroleum refining capacity within the US — a welcome development that I advocated for two weeks ago in a submission here to The Correspondent.

It is good that the administration is realizing that the production of crude alone is not a viable solution. Without the ability to turn crude into usable fuel, excess production can become nothing more than a storage problem.

A solid first step does not equal a comprehensive energy security strategy, however. Any response that proves to be too slow, too small or too late to address the scale of the issue would be nothing more than wasted effort.

It is impossible to address the scale of current refining capacity shortfalls without first quantifying them.

In 2020, OPEC estimated global spare refining capacity at 11 million barrels per day. By 2024, that spare capacity had dropped to only 3.7 million barrels per day (mbpd). Demand is continuing to increase, and by 2030 surplus refining capacity globally is expected to dip to 500K barrels per day.

More crude reaching the market does not automatically mean more gasoline, diesel or jet fuel is available where it is needed. Crude must reach suitable refineries, be processed into the right products and then transported and distributed.

Bottlenecks at any stage can keep fuel supplies tight even when crude continues to flow. Nor does excess crude necessarily become a storage problem: it can also be redirected, exported or processed elsewhere, provided the infrastructure and capacity exist.

What’s more, Ukraine’s sustained campaign against Russian oil infrastructure has added further pressure to the global refining system. According to the International Energy Agency, Russia has roughly 6.5 million barrels per day of installed refining capacity. But in June 2026, Russian refinery throughput fell to just 3.8 mbpd — its lowest level in more than 20 years and roughly 30% below a year earlier. The IEA reported that a Russian refinery was hit on average once every three days during the first eight months of 2026, as Ukrainian attacks intensified.

That 2.7 mbpd gap is not proof that Ukraine destroyed that much refining capacity. It measures the difference between Russia’s installed capacity and the amount of crude actually processed. But the impact extends beyond Russia. The IEA estimates that Russian diesel production fell nearly 30% compared with 2025 levels, adding further pressure to international fuel markets.

Then, as a one-two punch to the gut of global capacity, comes the war in Iran. Iranian retaliatory strikes have knocked out an estimated 3.52 mbpd of refining capacity. These estimates do not necessarily distinguish between permanent destruction, repairable damage or timelines for replacement.

The precise global shortfall cannot be established simply by subtracting reported refinery disruptions from OPEC’s spare-capacity estimates. But the underlying problem remains: the global refining system has a shrinking buffer against further disruption. When refined products become scarce, buyers compete for available supplies, putting upward pressure on prices.

The refining capacity trend was moving in the wrong direction, and this is without considering the existence of authoritarian leaders fomenting conflicts in which refineries are viable military targets.

The scale is enormous, especially when you consider the cost and regulatory requirements surrounding the construction of new refineries in the US.

If the US were to attempt to replace a substantial global refining capacity shortfall unilaterally, the cost would be incredible. A hypothetical 2.5 mbpd shortfall would represent 25 refineries processing 100,000 barrels per day each.

These 100,000 bpd refineries can cost between $5 billion and $10 billion and require seven to 10 years to complete under normal circumstances. It is important to recognize that it is not only the cost, but the time required that becomes an issue.

By the time a problem is realized, it is already too late to solve. The Defense Production Act may significantly decrease these practical and financial costs, but it will not eliminate them.

Recent refinery closures in California are routinely mentioned to politicize the issue. It is true that California’s environmental regulations and tax burdens placed on refineries can increase operating costs and make some facilities less competitive. It is also true that some of these refineries are over a century old and require ongoing maintenance and investment to remain competitive.

They all face the effects of aging and can lose their competitive edge when newer, more efficient systems come online. Aging, out-of-date refinery closures complicate the situation; politicizing them is an oversimplification. The issue is that an aging refinery does not sneak up on anyone.

If energy security is a national defense initiative that impacts all Americans, why should an individual state government or agency have the authority to regulate refineries into bankruptcy with no clear replacement? Perhaps it is time for federal regulations to mandate a certain amount of excess refining capacity to be maintained.

The Strait of Hormuz is also often discussed as a reason for high fuel prices. According to The Wall Street Journal, total Middle Eastern oil flows exceeded 23.3 mbpd, surpassing prewar levels. However, those figures include alternative routes; flows through the Strait of Hormuz itself remained below prewar levels.

The availability of crude is an inadequate measure of available energy. As stated earlier, the inability to convert this raw material into usable fuel and byproducts can leave crude in excess while refined-fuel supplies remain tight.

This imbalance can lead to a wide range of negative outcomes. Genuine energy security requires more than just domestic production. It requires the ability to refine, store, transport and distribute essential fuels.

When domestic US and allied capacity falls short, we become more exposed to foreign, potentially adversarial suppliers, international price shocks and geopolitical coercion.

The current crisis is an example of this. Very few Americans consider Russia to be an ally of the US. Purchasing anything from a geopolitical rival is questionable. Reports of Iranian diesel shipments to Russia, if confirmed, raise further questions about the origin of fuel and where the money ultimately goes.

Without a verifiable means to trace the money or the source of the products purchased, it is conceivable that we could financially equip our enemies to do us harm.

A comprehensive refining strategy is an integral component of a coherent national defense plan. If we have a strategic petroleum reserve, would it not be natural to have a strategy to make that petroleum useful?

The current crisis may end up serving as an example of learning things the hard way.

One thing is certain; it will not be the last crisis. If we fail to learn and respond now, the next iteration may be far worse. Trump’s invocation of the Defense Production Act is a good thing. The question remains: will it be enough of a good thing?