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Donald Trump’s tariff “chaos” and quest to lower energy prices are a threat to US oil production, and will undermine the president’s “drill, baby drill” agenda, Shale executives warn.
The president has pledged to lead a new era of American fossil fuel control and cheaper oil, saying that drops in energy prices will help defeat consumer inflation.
But Cher executives said in an investigation by the Federal Reserve Bank of Dallas that the president’s trade policy and rhetoric threatened drilling plans.
“The administration’s disruption is a disaster for the commodity market. “Drills, babies, drills” are nothing more than the cry of myths and populist gatherings,” wrote one Cher producer in his submission to the Dallas Fed. “Customer policy is impossible to predict and does not have clear goals. We need more stability.”
“The keyword that so far describes 2025 has been “uncertainty,” and as a public company, investors dislike uncertainty,” writes another Shale executive. Another said the policy risk suggested that it was time to press the “pause button” on upstream spending.
The quarterly Dallas FED survey is a closely monitored measure of drilling activities in the southwest, including Texas, in last year’s presidential election, the US’s most important oil-producing region and foundation of support for Trump. The executive’s anonymous submissions have provided an outspoken assessment of mood across the shale patch over the years.
A report released Wednesday, the first investigation since Trump re-entered, reveals oil executives are unhappy with his administration, revealing warnings that even the prolific Permian basins of Texas and New Mexico could slow down activity.
A survey of 130 companies found that most Permian executives reported a sharp rise in uncertainty in the first quarter of 2025. Almost a third said business outlook has deteriorated since the end of last year.
Executives made clear on Wednesday that a further decline in oil prices, which is around $70 a barrel, would undermine the sector. Given the rapid depletion rate of Shalewells, producers need a certain amount of capital injection to maintain production levels.
“The study has strengthened much of the market skepticism regarding ‘drills, babies and drills’,” says Hunter Korunfeind, a senior macro energy analyst at Rapidun Energy Group, calling Trump’s tariffs “additional input costs” and $50 in oil “negative” to oil production.
“You’re slowing down across the US, and as a result, production starts to decline and decline,” Kornfeind adds, referring to the $50 target in oil. “The growing uncertainty could either not support the (producer) planning or increase production.”
Trump’s trade adviser Peter Navarro suggested this month that $50 per $50 barrel oil will help curb inflation, but US energy secretary Chris Wright told the Financial Times that the US shale sector could increase production at that price.
“Due to the administration’s threat to oil prices of $50, we reduced capital expenditures in 2025 and 2026,” one respondent reported. “The “drill, baby, drill” doesn’t work for $50 per barrel oil,” wrote one producer.
“The rhetoric from the current administration is useless. If crude oil prices continue to fall, production will be shut down,” another producer wrote.
The Dallas Fed report said that on average, an excavator of at least $65 per barrel, is the price required to make a profit.
Even if Shale’s profits and oil production hit record highs under former President Joe Biden, the US oil boss was one of Trump’s deep donors during last year’s White House race.
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Trump has pledged a shale baron to cut environmental regulations and moved quickly to scrap the pollution rules imposed by Biden.
But the shale atmosphere threatens to significantly increase the production costs of excavators as Trump’s tariffs, including a 25% tax on two important oil industry inputs, are sour.
“In my entire career over 40 years, I have never felt any more uncertainty about our business,” wrote one producer in the survey.
Additional Reports by Jamie Smyth of Lausanne
