Some oil patch execs say "drill baby drill" isn't happening
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President Trump wants to "drill baby drill." But many producers in the heart of the oil patch have other plans — and some say Trump's trade policies are discouraging drilling.
Why it matters: Many things affect gasoline prices. But producers' caution about growing output could limit how much prices at the pump might fall by helping avoid a large market glut of oil.
Driving the news: The Federal Reserve Bank of Dallas on Wednesday released its latest quarterly survey of execs in its region that includes the prolific Permian Basin.
- These anonymous surveys are hot commodities for anyone seeking the industry pulse.
Threat level: "The Liberation Day chaos and tariff antics have harmed the domestic energy industry," one executive told the Fed.
- "Drill, baby, drill will not happen with this level of volatility. Companies will continue to lay down rigs and frack spreads," said the exec, one of several who criticized the tariffs.
State of play: The poll of exploration and production (E&P) firms and drilling contractors showed overall activity contracting slightly and production dipping as well in Q2.
- Looking ahead, the poll's average of price forecasts is $68 per barrel over the next year for WTI, the benchmark U.S. grade, roughly where it's at now.
- "Almost half of executives surveyed expect to drill fewer wells in 2025 than they planned at the start of the year," it states.
- Large producers (10,000+ barrels per day) were more likely to see drilling "significantly" fall.
What we're watching: Prices and input costs.
- If they drop to $60 per barrel and stay there, 61% expect their production to fall slightly over the next 12 months, while 9% see a big drop (see above).
- Twenty-seven percent of execs say the recent steel tariff hike will mean slightly fewer wells drilled, and 5% expect significantly fewer.
Flashback: The Q1 survey showed that on average, firms say they need oil at $65 to profitably drill new wells.
- The latest outlook from the Energy Department's independent stats arm projects a slight drop in the second half of this year and a slight annual decline in 2026.
Yes, but: A White House spokeswoman said Trump is making drilling easier by rolling back "stifling" Biden-era regulations.
- "The One, Big, Beautiful Bill's tax cuts and full equipment expensing will further turbocharge growth and investment by oil and gas companies — another reason Republicans need to get this bill across the finish line and onto the President's desk," Taylor Rogers said in a statement.
The big picture: U.S. output is already at record levels, and the country is by far the world's largest producer.
- Trump's "dominance" agenda includes more drilling access in offshore areas and Alaska. But those are very long-term projects.
- Today's economic picture, combined with shale producers' focus on capital discipline and shareholder payouts, is working against near-term growth.
What's next: The global market sways domestic drilling decisions, and OPEC+ will meet July 6 to decide on its next tranche of output increases.
