Trump to use the Defense Production Act to boost U.S. gas and diesel production. Could it help?

President Trump on Thursday said his administration will invoke the Defense Production Act to spend $150 million to boost gasoline and diesel production in the U.S., the latest effort from the administration to lower fuel prices.

The Defense Production Act, or DPA, is a Korean War-era law that allows the president to use loans, purchase commitments and other mechanisms to incentivize the production of critical materials and goods.

The announcement follows a meeting President Trump had with refiners to discuss immediate steps to bring more capacity online, a White House official told CBS News.

In a press release on Thursday, the Department of Energy said the DPA funding will increase U.S. refining output by millions of gallons per day and lower fuel prices for Americans, who have been paying more than $4 a gallon on average for gas over the last three months. 

The new plan to increase fuel production comes as polling shows a majority of Americans are pessimistic about the U.S. economy amid a growing affordability crunch. Crude oil prices have continued to climb, hitting their highest level this week since May. 

On Friday, Brent crude, the international standard, was $116 a barrel, up 2.6%, while West Texas Intermediate, the U.S. benchmark, was around $103 a barrel, up 3%.

The national average for a gallon of gasoline stood at $4.29 on Friday and $6.32 for diesel, according to AAA. Those prices represent a 40% and 74% jump from a year earlier, respectively.

Passed in 1950, the DPA was originally aimed at boosting supplies for national defense purposes. However, Congress has broadened its application to address natural hazards, terrorist attacks and other national emergencies.

Will the measure be effective?

Experts told CBS News that invoking the DPA is unlikely to do much to lower fuel prices.

"I don't think that's really going to have any impact," Patrick De Haan, a petroleum expert at GasBuddy, told CBS News in an email.

There are some potential upsides: DPA funds could speed up some refining expansions, Tom Kloza, chief energy adviser for Gulf Oil, told CBS News. However, he said any short-term benefits are unlikely.

"There is no slack in U.S. refining, so production can't be added regardless of political will," Kloza said. He said it typically takes months and calendar quarters to bring units back to service.

The White House official said the DFA funds will help expand capacity and modernize existing infrastructure, which is much faster than building a new refinery.

The U.S. produces more fuel than it consumes. Oil prices, however, are set on the global market, where the Iran war and Russia-Ukraine conflict have disrupted shipments, pushing prices higher.

The U.S. produces around 5.3 million barrels of distillate fuel oil, a category that includes diesel, per day but consumes only about 3.6 million barrels per day, experts have noted. The U.S. also produces 9.5 million barrels of gasoline per day, more than the 8.9 million consumed domestically.

The U.S. exports about 1.4 million barrels of diesel per day, Kloza, told CBS News. 

A spokesperson for the American Fuel & Petrochemical Manufacturers, a trade association that represents refiners, said it appreciated the Trump administration's focus on the importance of refineries.

"Our country's 128 operating refineries produce more fuel in the United States than we consume," the spokesperson said in an email. "They are running all-out to keep Americans supplied and the global economy moving despite major disruptions and actual fuel shortages in other parts of the world."