US Oil Industry Falters Under Trump Despite Drill Baby Drill Promises

Donald Trump stormed back into the White House pledging to “drill baby drill” and promising to unleash a new era of American energy dominance. Yet, contrary to his campaign slogans, US oil production is now set to decline over the coming year, leaving industry chiefs frustrated and disillusioned.

The reality for US shale executives is bleak. Persistently low oil prices, a global supply glut, and rising costs linked to Trump’s ongoing trade war have combined to render expansion uneconomic. One industry leader, featured in the Dallas Fed’s Q3 Energy Survey, described the US shale business as “broken,” noting that the sector has been crippled by political hostility and what he sees as economic mismanagement from the current administration.

West Texas Intermediate (WTI) crude, currently priced just above $60 per barrel, has dropped around 16 percent since the start of the year. Industry observers argue that even at $70, investment in American oil cannot be justified under these market conditions. With Goldman Sachs forecasting an average WTI price of only $52 in 2026, any hope for a surge in production appears slight.

This is a stunning reversal from the previous decade and a half, when the US oil sector’s output nearly tripled to a record 13.6 million barrels per day this past July. Now, leading analysts expect production to fall by between 500,000 and a million barrels per day by the end of next year, marking an abrupt end to the sector’s sustained growth. The national rig count, a key indicator of drilling activity, has dropped sharply since Trump’s latest term began, with major players such as BP, Chevron, ConocoPhillips, and ExxonMobil scaling back staff as the industry contracts.

The underlying cause of this rapid decline is price. Oil has been buffeted by falling global demand expectations, triggered largely by Trump’s widespread tariff measures. In tandem, Opec’s reversal of post-pandemic production cuts has flooded markets, amplifying the supply surplus and driving down prices further. Oil market analyst Tom Kloza warns that the world faces a period of considerable oversupply, with an expected two to three million barrels per day more than needed, inevitably depressing prices.

Many American producers now struggle to cover their costs, with the break-even threshold estimated at roughly $62.50 per barrel for maintaining flat production. WTI below $60 threatens the entire US onshore business model, and at $50, the rationale for investment collapses entirely. Industry experts point out a deep flaw at the heart of Trump’s energy strategy. The administration seeks both to boost domestic production and to keep consumer prices low, yet the two goals are at odds – producers need higher prices to drill, but lower prices satisfy motorists and support political popularity.

While Trump has sought to cut bureaucracy, reduce royalties, and open up new land for drilling, these measures have barely trimmed break-even costs and have not moved the market needle in any meaningful way. Recent moves to sanction major Russian oil companies might push some prices higher, potentially offering a lifeline to American producers, but the effectiveness and duration of such interventions remain uncertain.

As things stand, the sector has shifted from “drill baby drill” to a cautious “wait baby wait.” Without a sustained rise in prices, Trump’s ambitions for US energy resurgence look to be on increasingly shaky ground.