On Tuesday, the President convened a meeting at the White House with leaders from the oil sector, urging them to construct additional refineries to boost output of refined products, a move aimed at lowering gasoline prices ahead of the November midterm elections. However, this appeal faces considerable skepticism from the industry itself. Currently, operating an existing refinery in the U.S. is highly lucrative, yet building a new one from scratch presents an entirely different set of challenges. This contradiction helps explain why, despite record profits driven by historic fuel supply disruptions in the Middle East, Russia, and China, American refiners are not planning to expand their capacity.

Simply put, oil companies do not believe the current period of high demand and profitability will last. During the meeting, the President and oil executives discussed alternative methods to expand domestic refining capacity, such as reducing regulations, streamlining permitting processes, and encouraging further investment. A U.S. official stated that the President made it clear he wants cheaper gasoline for Americans, and refiners and distributors expressed agreement with that goal. The White House also noted an unexpected deal that grants the U.S. direct rights to a substantial portion of Venezuela's oil reserves, which, as Venezuelan crude production comes online, would necessitate additional domestic refining capacity to process it.

Executives from several major companies attended the meeting, including representatives from Chevron, Valero Energy, Marathon Petroleum, and PBF Energy. Notably, Exxon Mobil, the nation's third-largest refiner, did not send a representative. Given the President's recent criticisms that the industry has not lowered gasoline prices quickly enough, some companies were initially cautious about participating. According to AAA data, the average U.S. retail gasoline price on Tuesday was around $4.10 per gallon, compared to $2.98 before the conflict with Iran began.

The core issue is that many factors driving up fuel prices are beyond the President's control and not influenced by what he calls his "favorite industry." With the conflict now in its sixth month, tight supplies of diesel, jet fuel, and gasoline have overtaken crude oil market volatility as the primary concern for the energy sector. Energy Information Administration data shows that U.S. refinery utilization rates have exceeded 97% in recent weeks, approaching their highest levels in about eight years, in an effort to meet market demand. Exxon Mobil CEO Darren Woods told investors in late July that this level of utilization is unsustainable in the long term and that tight refining capacity would remain a global challenge for years to come.

Some companies have postponed scheduled maintenance to capitalize on high profit margins for diesel and other products. The crack spread, which is the difference between what refiners pay for crude oil and what they earn from selling refined products, has seen diesel crack spreads hit record highs above $100 per barrel. This has significantly boosted industry profits, with the six largest U.S. refiners reporting a combined $24.7 billion in second-quarter refining earnings, nearly five times the amount from the same period last year.

However, building new refineries is not economically feasible. Such projects require billions of dollars in investment and take three to five years to complete. The industry widely expects energy markets to return to normal long before these projects could come online. As a result, companies are instead focusing on expanding and modernizing their existing facilities. Robert Campbell, an analyst at New York-based energy consultancy Energy Aspects, noted that no company would invest billions based solely on three months of exceptional profits, questioning whether a repeat of the simultaneous events involving Russia, the Middle East, and China's export reductions is likely.

For decades, the U.S. has been closing refineries, with 128 fewer operating today than in 1982. The most recent U.S. refinery was completed in 1977, and roughly a quarter of existing facilities are over a century old. The practical obstacles to building new refineries are immense. First, obtaining the numerous permitting approvals from federal, state, and local governments is a massive undertaking. The industry has long lobbied Congress to reform the approval process to facilitate pipeline and other energy infrastructure projects. Simultaneously, long-term U.S. gasoline demand is expected to decline as electric vehicles become more common and engine efficiency improves. John Ohls, director of refined products at oil and gas data analytics firm Novi Labs, posed the question of who would invest in a project whose market demand may have already shrunk by the time it is completed. He estimated that over the next 20 years, companies could add a combined 400,000 barrels per day of refining capacity through upgrades to existing facilities in Texas, Louisiana, and other Gulf Coast states, roughly equivalent to the size of a large refinery.

Analysts remain skeptical about new construction projects. In March, the President mentioned that a startup called "American First Refining Company" would build the nation's first new refinery in 50 years in Brownsville, Texas. This $300 billion project aims to create jobs and boost the economy in southern Texas. However, the region lacks the necessary infrastructure to transport sufficient crude oil to the refinery, and both project financing and permitting pose significant hurdles.

On the other hand, major oil companies are investing hundreds of millions of dollars to reconfigure their refining units, reducing gasoline output—which is most vulnerable to electric vehicle adoption—and shifting toward diesel, petrochemicals, and lubricants. Exxon Mobil plans to invest approximately $2 billion to upgrade its Baytown, Texas refinery to increase diesel and lubricant base oil production starting in 2028, while reducing gasoline output. Chevron has a smaller similar project at its Pascagoula, Mississippi refinery. Chevron CEO Mike Wirth stated that the company will continue to prioritize upstream exploration and production over refining in the long term. He told investors last year that while he is optimistic about the refining business and would not rule out future investments if opportunities arise, the company's long-term strategy is to build a business with a higher proportion of upstream operations.