$150M refining push won't lower diesel soon: AAA average rises to $6.35 on Sunday

The White House put $150 million behind U.S. refining last week, and diesel buyers got no relief over the weekend. The AAA national diesel average was $6.3474 a gallon on Sunday, Oct. 25, up from $6.3224 a week earlier, according to AAA. It was $3.6567 a year ago.

What was announced

On Thursday, Oct. 22, the Energy Department said it will use Defense Production Act Title III money to expand petroleum production, storage and logistics at refineries across the country. Up to $150 million would come from $1 billion Congress already appropriated for energy projects tied to national security, according to the Energy Department. It has not named any recipients. Energy Secretary Chris Wright said the money will "expand our nation's refining capacity and strengthen our energy security."

The department says the funding should raise refining output by millions of gallons a day. It gave no date for when any of that would show up.

Why the pump price may not move

Analysts quoted by CBS News on Oct. 23 were doubtful. GasBuddy's Patrick De Haan said he does not expect much impact on prices. Tom Kloza of Gulf Oil said U.S. refineries have no spare capacity, so any benefit would take time. The refiners' trade group, AFPM, said the country's 128 operating refineries are already running at full capacity.

The bigger driver is crude. CBS reported Brent at about $116 a barrel on Friday, with West Texas Intermediate near $103. Distillate is also priced against the world market. CBS cited experts putting U.S. distillate output near 5.3 million barrels a day against domestic use near 3.6 million, and Kloza put exports at about 1.4 million barrels a day. Barrels that can leave the country are priced like barrels that can be sold abroad.

The Energy Information Administration's last weekly reading, for Oct. 19, was $6.276 a gallon, up 9.7 cents on the week, with the West Coast at $7.394 and California at $8.242, per EIA. The next EIA update is due Tuesday, Oct. 27.

What it means for carriers

Plan around today's price, not a policy promise. Carriers on index-based fuel surcharges will see this week's EIA number flow through with the usual lag, and owner-operators buying at the pump are already paying the AAA figure. A refinery project funded now would take well beyond this quarter to add barrels.

What shippers and brokers should watch

Watch which projects the Energy Department picks and how fast they can add output. Watch Tuesday's EIA print and Monday's crude open for the next move in surcharge tables. Bid-season fuel clauses written at $6 diesel carry real risk in either direction, so check how often your surcharge schedule resets.

PDI tracks the weekly average on its diesel prices page.