Trump Wants Big Oil to Build More Refineries. Why It’s a Tough Sell

Washington: US President Donald Trump wants America's biggest oil companies to build more refineries, arguing that additional refining capacity could help bring down fuel prices for consumers. But getting the industry to make such a massive long-term investment may prove considerably harder than securing political support for the idea.

Trump has been pressing oil executives to increase refining capacity as gasoline prices remain a major economic and political concern ahead of the US midterm elections. The president recently met with major refiners as his administration explored ways to ease pressure at the pump.

The problem is that building a refinery is an expensive, years-long undertaking. Oil companies must weigh billions of dollars in construction costs against questions about whether demand for gasoline will remain strong enough to justify the investment over several decades.

Why oil companies are reluctant

The US has not built a major new refinery since 1977, reflecting how difficult the economics and regulatory environment have become for new projects. The country has also seen its overall refinery count decline substantially since the early 1980s.

Today's refiners are therefore more inclined to expand, modernise or reconfigure existing plants rather than construct entirely new facilities.

The industry's caution is partly driven by uncertainty over future fuel demand. The growing popularity of electric vehicles could gradually reduce gasoline consumption, potentially leaving a new refinery with a shrinking market during the later years of its operating life.

High interest rates, construction expenses, environmental requirements and lengthy permitting procedures add to the challenge.

Trump wants cheaper fuel

For Trump, expanding domestic refining capacity is part of a broader push to increase US energy production and lower energy costs.

The administration has also considered other measures to ease pressure on fuel prices. In recent weeks, the White House has pushed for broader exemptions from federal biofuel blending requirements for smaller refineries, arguing that the move could reduce costs for refiners.

But analysts and industry executives point out that additional refining capacity cannot be created overnight. Even if a company decided to build a new plant today, the project would take years before producing fuel.

That makes refinery construction a poor tool for addressing sudden price spikes.

Existing refineries offer a faster route

Major oil companies appear more interested in making the most of the refineries they already operate.

Companies such as ExxonMobil and Chevron have been focusing on upgrading existing facilities and adjusting their product mix rather than rushing into construction of entirely new gasoline refineries. Some refiners are increasingly looking toward products such as diesel, lubricants and petrochemicals, where they see stronger long-term opportunities.

The current market also complicates Trump's argument. Refinery margins have been strong, partly because global supply disruptions have tightened fuel markets. Yet companies understand that today's unusually attractive margins may not last for the decades required to recover the cost of a new refinery.

A political push meets a long-term business decision

Trump's administration has promoted refinery expansion as part of its effort to strengthen US energy security and reduce gasoline prices. The president has also pointed to potential increases in crude supply, including developments involving Venezuela, as a reason for expanding US refining capacity.

But having more crude oil available does not automatically mean companies will build new refineries. Refineries require enormous upfront investment, dependable long-term demand and confidence that future regulations and market conditions will support the project.

That is why Trump's call for a new generation of US refineries faces a fundamental problem: the president can encourage companies to build, but he cannot easily persuade them to make investments that may take decades to pay off.

For now, the industry's preference appears to be clear — improve and expand existing facilities where economically viable, rather than gamble billions on entirely new refineries.