Trump Invokes Defense Production Act to Boost U.S. Oil and Fuel Output

The White House is using a Cold War-era law to try to ease high fuel prices.

What happened

President Donald Trump on Thursday determined that petroleum production, refining and related activities are essential to national defense, CNBC reported. The presidential memo invokes part of the Defense Production Act, allowing the government to offer financial incentives for oil-related activity, pipelines and fuel storage.

The memo said that without such action, the U.S. could not provide enough of those energy services in a "timely manner due to constrained financing, long lead times, permitting and infrastructure bottlenecks, and supply chain limitations." It did not name specific projects. Vice President JD Vance said last week that the law would be used to help Delek U.S. expand its Texas refinery. Holdings, according to CNBC.

The backdrop

Crude and diesel prices have surged since the U.S. and Israel attacked Iran at the end of February, limiting energy shipments worldwide, CNBC reported, with Ukrainian strikes on Russian refineries adding to shortages. High fuel costs are a political issue ahead of the Nov. 3 elections.

Why it matters for crypto

Oil has become one of the main forces behind interest-rate expectations. CoinDesk reported that WTI crude was still trading near $100 early Friday in Asia, and that the order had yet to materially cool prices. Building refining capacity takes time, so the move may do little in the near term. As long as energy keeps inflation elevated, central banks are less likely to ease, a backdrop that has weighed on bitcoin and other risk assets this month.