During the Cold War, the U.S. was vulnerable to supply shocks, such as cuts to its supply of imported crude oil. In 1979, the Iranian Revolution demonstrated that vulnerability by pushing crude prices from roughly $13 to $34 per barrel within a year. That experience drove successive American administrations to pursue energy independence, a goal they backed with waves of investment in domestic supply and refining infrastructure. 

The shale revolution, in which American companies used hydraulic fracturing after 2008 to unlock new sources of light crude, then made the U.S. the largest oil-producing nation on the planet by 2018. This revolution did not deliver the fuel security its output figures promised. Because the country's refining infrastructure was built largely around heavy grades, refiners on the Gulf Coast have been unable to capitalize on the light crude flowing out of the shale fields. As a result, the U.S. has had to sell that light crude to its allies in Europe and East Asia. 

America should invest in light crude refining for three reasons: to keep fuel flowing at home when a maritime chokepoint closes, to capture the export margins that foreign refiners now earn on American crude and to gain the diplomatic leverage that comes from supplying allies with finished fuel. 

First, supply resiliency requires refineries built for the light crude that American wells actually produce, since the heavy grades those plants currently run must cross at least one maritime chokepoint to reach the Gulf Coast. 

The Energy Information Administration tracks seven chokepoints, of which the Strait of Hormuz alone carries roughly 20 million barrels per day, about a fifth of world demand. Iran mined the Gulf during the Tanker War of the 1980s, Washington blamed Tehran for limpet mine attacks on six tankers near Hormuz in 2019. Indeed, Houthi missiles have targeted more than 100 merchant ships near the Bab el-Mandeb since late 2023, a campaign that resumed in 2026. 

If any of those closures returned at scale, or if a war over Taiwan shut the Strait of Malacca, American refiners would lose the Saudi and Iraqi heavy barrels they import while domestic light crude sat stranded at export terminals. Because a refinery cannot switch grades overnight, having spent decades tuning its equipment to heavy oil, the mismatch would show up as diesel and jet fuel shortages at home, whichever strait closed first. 

Second, the ability to export refined products would earn American firms more per barrel than the raw crude that goes into them.

In 2023, American refiners shipped out roughly 6 million barrels per day of gasoline, diesel, jet fuel and other products, at margins that at times passed $30 per barrel on diesel alone. When the United States sends its raw light crude to Rotterdam or Ulsan, refiners in Europe and Korea take that margin while American producers collect only the wellhead price. Since the European Union banned Russian diesel in February 2023, European buyers have paid extra for American fuel, a gap that new light crude plants on the Gulf Coast could fill at scale. 

Third, foreign policy leverage goes to the country that sells finished fuel, since a buyer of raw crude can more readily find another seller. Because crude oil trades across dozens of suppliers, a customer who loses American barrels can replace them from Guyana or the North Sea within weeks. In contrast, diesel and jet fuel move through a thinner market, in which refining capacity sets the limit, so a supplier of fuel becomes much harder to replace.

Washington could then extend or withhold fuel guarantees in talks with allies in East Asia, where Japan and Korea bring in nearly all of their crude through sea lanes that China could cut. 

The path runs through expansions at existing plants rather than new refineries since no company has built one with major capacity in the United States since 1977. In 2023, ExxonMobil finished a 250,000 barrel per day expansion of light crude capacity at its Beaumont plant for roughly $2 billion, which puts the cost of 1 to 2 million barrels of new light capacity somewhere between $10 and $20 billion. 

Furthermore, the 2025 reconciliation bill redefined eligible energy infrastructure under Section 1706 to include refining. The Department of Energy can now guarantee loans for exactly these expansions from a $250 billion lending cap. Additionally, the Permitting Council could put each project on its FAST-41 dashboard with a binding federal timetable, while Congress could add a 25 percent investment tax credit modeled on the one that moved TSMC and Intel to build chip plants in Arizona and Ohio. 

Because that leverage builds on the first two gains, a refining sector sized for American light crude would protect fuel supply at home through any chokepoint closure, keep the $30 diesel margin with American firms and give the State Department a tool that raw crude exports cannot offer. 

Alvin Camba, Ph.D., is the lead scientist and director of research at Lyvi, where he directs SIGMA, a supply chain intelligence program funded by the U.S. Department of Defense to secure America's critical material supply chains. He is also a nonresident fellow at the Atlantic Council's Indo-Pacific Security Strategies in the Scowcroft Center for Strategy and Security and a senior research fellow at Associated Universities, Inc.

Copyright 2026 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

 For the latest news, weather, sports, and streaming video, head to The Hill.