Donald Trump’s ambitions for a new oil boom may face challenges due to Wall Street’s hesitance to support another round of drilling, according to shale industry executives. Predictions from Rystad Energy and Wood Mackenzie indicate that total U.S. oil production during Trump’s potential second term could increase by less than 1.3 million barrels per day, significantly lower than the 1.9 million b/d increase achieved during Joe Biden’s presidency and far less than the surge seen in the previous decade’s shale boom.
Executives noted that investor pressure and the economic realities of the industry, which is significantly influenced by oil prices, would impede Trump’s aim for “American energy dominance.” Wil VanLoh, the CEO of Quantum Energy Partners, a leading investor in the shale sector, expressed skepticism regarding the likelihood of companies engaging in extensive drilling. He emphasized that Wall Street operates on a financial agenda rather than a political one, lacking incentives to encourage increased well drilling.
This landscape suggests that Trump’s strategy, which hinges on an increase in oil supply to combat U.S. inflation by reducing costs for consumers, might not unfold as expected. In his recent speeches, Trump articulated a vision to lower prices and restore the nation’s wealth through domestic energy resources, including calls for OPEC to lower oil prices to facilitate global interest rate cuts.
However, projections indicate that reduced oil and gas prices could diminish the profitability of shale companies, making them less inclined to adhere to Trump’s “drill, baby, drill” directive. Ben Dell, managing partner at Kimmeridge, noted that price signals would hold greater weight than political motivations. Following record-high oil production last year, forecasts from the Energy Information Administration suggest a modest output increase of only 2.6% to 13.6 million b/d by 2025, with a predicted rise of less than 1% in 2026 due to price pressures.
Some shale producers are expressing concerns that prime drilling locations may be exhausted after years of rapid exploration in regions like Texas and North Dakota. In swift response to his inauguration, Trump signed several executive orders aimed at enhancing oil and gas production and announced plans to repeal regulations from the Biden administration, which producers argued had elevated costs and limited activity.
Despite his strong support for fossil fuels and deregulation, executives indicated that these actions might not significantly alter production levels. David Schorlemer, CFO of ProPetro, stated that while the incoming administration holds a favorable energy stance, a substantial shift in activity levels is not anticipated.
The cautious approach of producers arises after two decades of growth marked by extreme volatility in oil prices. In the past 15 years, U.S. oil and gas production surged as companies discovered methods to extract vast amounts of oil from shale formations, fueled by Wall Street investments. However, devastating price drops in 2014 and 2020 led to numerous bankruptcies and a more restrained investment climate, altering the behavior of producers in light of declining crude prices.
A recent survey by the Kansas City Federal Reserve found that the average U.S. oil price required for a significant boost in drilling stood at $84 per barrel, higher than the current price of approximately $74 per barrel. JPMorgan forecasts that U.S. oil prices could drop to $64 per barrel by year’s end, leading to a slowdown in shale activity by 2026. Experts emphasize that if oil prices remain low, regulatory rollbacks will have minimal impact on production levels.
Consequently, major U.S. oil producers, such as Chevron—the second-largest oil producer in the country—plan to reduce spending for the first time since the pandemic-induced oil crash. Chevron has set a budget of $14.5 billion to $15.5 billion for 2025, down from last year’s budget, while other companies like ConocoPhillips, Occidental Petroleum, and EOG Resources are maintaining or lowering their spending levels. The decisions reflect a desire to align with Wall Street expectations, where shareholders react strongly to increases in capital spending.
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