President Donald Trump’s “drill, baby, drill” call for a resurgence in United States oil production will be frustrated by the reluctance of Wall Street to approve another frenzy, according to shale bosses, reported the Financial Times.
By Cristen Hemingway Jaynes
U.S. oil and gas output during Trump’s second term will increase by less than 1.3 million barrels of oil a day, Wood Mackenzie and Rystad Energy said, well below the nearly two barrels a day rise under Joe Biden.
“The incentive, if you will, to just drill, baby, drill… I just don’t believe that companies are going to do that,” said Wil VanLoh, chief executive of Quantum Energy Partners, one of the largest investors in shale, as the Financial Times reported.
“Wall Street will dictate here — and you know what? They don’t have a political agenda. They have a financial agenda… They have zero incentive to basically tell the management teams running these businesses to go and drill more wells,” VanLoh said.
This could be a big letdown for the new president, who is expecting a surge in oil supply to lower U.S. inflation by making fuel and goods less expensive.
“We will bring prices down… We will be a rich nation again, and it is that liquid gold under our feet that will help to do it,” Trump said during his inauguration speech.
At the World Economic Forum’s annual meeting in Davos on Thursday, Trump called on OPEC to bring down oil prices. However, lowering the price of oil and gas would reduce profits for shale companies, making them less likely to heed Trump’s agenda.
“Prices will be a bigger signal than politics,” said Ben Dell, managing partner at energy investment firm Kimmeridge, which owns shale assets in the Permian Basin in Texas, the most productive oilfield on the planet.
Oil production in the U.S. reached a record high in 2024, but the Energy Information Administration predicts output will only jump 2.6 percent this year to 13.6 million barrels a day before growing less than one percent the following year due to price pressures.
After he was sworn in for a second term, Trump signed an executive order declaring a “national energy emergency.”
“It’s hard to reconcile the notion that we have an energy emergency, when the U.S. produced 13.2 million barrels per day of crude oil in 2024,” said Stewart Glickman, an analyst with the Center for Financial Research and Analysis (CFRA), as reported by AFP.
After over a decade of exploration across North Dakota and Texas, some shale producers are concerned that the best areas in the U.S. have already been tapped, the Financial Times said.
Executives warned that Trump’s unrelenting support of fossil fuels and deregulation may have a limited effect.
“As much as the incoming administration is very favourable around energy and power… we don’t see a significant change in activity levels going forward,” said David Schorlemer, chief financial officer of oilfield services company ProPetro, as the Financial Times reported.
Over the last 15 years, oil and gas production in the U.S. soared as vast deposits were uncovered through the destructive process of drilling into shale rock.
Prices crashed in 2014 and 2020, causing many companies to go bankrupt. Investors and producers became more cautious in the wake of lower crude prices.
Oil drillers might not be in a rush to capitalize on Trump’s executive order, “Unleashing Alaska’s extraordinary resource potential,” released on Monday, reported Reuters.
The order would reopen vast wilderness areas to drilling and mining, as well as expedite project permits.
“Many of these areas have been closed for a good long while,” said Dustin Meyers, American Petroleum Institute’s senior vice president of policy, as Reuters reported. “There is always the risk that these areas could be reclosed after the next election cycle.”
A recent survey by the Kansas City Federal Reserve found that a price of $84 per barrel would be needed to support a substantial uptick in drilling, but the price currently sits at approximately $74 a barrel, reported the Financial Times.
JPMorgan has predicted U.S. oil prices will fall to $64 a barrel before year’s end, with shale activity slowing to a “crawl” next year.
“If prices are anaemic, you can remove all the red tape you want. It’s not going to move the needle on production,” said Hassan Eltorie, S&P Global Commodity Insights’ director of companies and transaction research, as the Financial Times reported.
Cristen is a writer of fiction and nonfiction. She holds a JD and an Ocean & Coastal Law Certificate from University of Oregon School of Law and an MA in Creative Writing from Birkbeck, University of London. She is the author of the short story collection The Smallest of Entryways, as well as the travel biography, Ernest’s Way: An International Journey Through Hemingway’s Life.
