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Donald Trump’s tariff “chaos” and quest to drive down energy prices are a threat to US oil output and will undermine the president’s “drill, baby drill” agenda, shale executives have warned.
The president has pledged to usher in a new era of American fossil fuel dominance and cheaper oil, saying a fall in energy prices will help beat back consumer inflation.
But shale executives told a survey by the Federal Reserve Bank of Dallas that the president’s trade policies and rhetoric were now threatening their drilling plans.
“The administration’s chaos is a disaster for the commodity markets. ‘Drill, baby, drill’ is nothing short of a myth and populist rallying cry,” one shale producer wrote in a submission to the Dallas Fed. “Tariff policy is impossible for us to predict and doesn’t have a clear goal. We want more stability.”
“The keyword to describe 2025 so far is ‘uncertainty’ and as a public company, our investors hate uncertainty,” wrote another shale executive. Another said the policy risks suggested it was time to hit the “pause button” on upstream spending.
The quarterly Dallas Fed survey is a closely watched gauge of drilling activity in the south-west — including Texas — the US’s most important oil-producing region and a bedrock of support for Trump during last year’s presidential election. Executives’ anonymous submissions have for years offered a candid assessment of the mood across the shale patch.
The report published on Wednesday — the first survey since Trump re-entered office — reveals oil executives’ discontent with his administration and a warning that activity could be on the cusp of slowing down, even in the prolific Permian Basin of Texas and New Mexico.
Most executives in the Permian reported a sharp increase in uncertainty in the first quarter of 2025, according to a survey of 130 companies. Nearly a third said their business outlook had worsened since the end of last year.
Executives were explicit that any further fall in oil prices, which were about $70 a barrel on Wednesday, would damage their sector. Given shale wells’ rapid depletion rates, producers require constant capital infusions to sustain output levels.
“The survey reinforces a lot of the market’s scepticism around ‘drill, baby, drill’,” said Hunter Kornfeind, senior macro energy analyst at Rapidan Energy Group, calling Trump’s tariffs an “added input cost” and $50 oil a “negative” for oil production.
“You would start to see activity slow across the US and then as a result, production start to turn over and decline,” Kornfeind added, referring to the $50 target for oil. “Heightened uncertainty isn’t helping [producers] plan or potentially drive production higher.”
Trump’s trade adviser Peter Navarro suggested this month that $50-per- barrel oil would help curb inflation, while US energy secretary Chris Wright told the Financial Times that the US shale sector could increase production at that price.
“The threat of $50 oil prices by the administration has caused our firm to reduce its 2025 and 2026 capital expenditures,” reported one respondent. “‘Drill, baby, drill’ does not work with $50 per barrel oil,” wrote one producer.
“The rhetoric from the current administration is not helpful. If the oil price continues to drop, we will shut in production,” wrote another producer.
The Dallas Fed report said drillers on average needed prices of at least $65 per barrel to make a profit.
US oil bosses were among Trump’s deep-pocketed donors during last year’s White House race, even as shale profits and oil production hit record highs under former president Joe Biden.
Trump promised shale barons he would slash environmental regulations and has moved quickly to scrap pollution rules imposed by Biden.
But the shale mood has soured as Trump’s tariffs — including levies of 25 per cent on aluminium and steel, two crucial oil industry inputs — have threatened to sharply increase production costs for drillers.
“I have never felt more uncertainty about our business in my entire 40-plus-year career,” wrote one producer in the survey.
Additional reporting by Jamie Smyth in Lausanne
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