When President Donald Trump took office, he promised to “unleash American energy”—and quickly left no doubt that he meant fossil fuel energy in particular.
In the months since, he has opened up vast stretches of public lands and U.S. oceans for drilling and reduced the royalty rates that companies must pay for extracting oil and gas in those areas. His administration has also proposed scrapping environmental rules requiring polluters to report their emissions to the EPA, easing regulations for oil and gas wastewater disposal, and rewriting rules to weaken risk management protocols at refineries. And by declaring a national energy emergency, Trump has cleared the way for faster permitting primarily for fossil fuel infrastructure, bringing down review timelines from multiple years to a few weeks. Trump’s signature legislation, the One Big Beautiful Bill Act, quietly included billions of dollars in new federal tax breaks available to fossil fuel companies. More substantially, it dramatically scaled back federal support for wind and solar energy, as well as electric vehicles—effectively dealing a blow to the newer technologies competing with oil and gas interests.
But the boom times Trump has promised U.S. fossil fuel producers have not materialized. In fact, the industry is headed in the opposite direction: In recent months, Chevron said it would cut as much as one-fifth of its workforce, ConocoPhillips announced plans to let go of up to a quarter of its workforce by the end of the year, and Halliburton began its own round of layoffs. Across the sector, companies have also been reining in spending, cutting capital expenditures, pausing or canceling major projects, and reducing rig counts.
“We believe we are at a tipping point for U.S. oil production at current commodity prices,” warned Travis Stice, CEO of Diamondback Energy, a Texas-based oil and gas company, in May. “Today’s prices, volatility, and macroeconomic uncertainty have put [the industry’s] progress in jeopardy.”
Since Trump’s inauguration in January, crude oil prices have dropped nearly 20%. That’s left prices below the roughly $65-per-barrel level where most U.S. producers can expect to break even on drilling, and they’re cutting back in anticipation of these unprofitable extraction conditions lasting into 2026. Indeed, the Energy Information Agency projects that oil prices, which currently sit at about $62 per barrel, will drop to $51 per barrel next year.
This reflects the makeup of the global oil market, which Trump has far less control over compared to the domestic regulations he’s attacked. In Saudi Arabia, for instance, where drilling costs are among the lowest in the world, a barrel of oil costs at most $10 to extract. So when the global price of oil drops, as it has this year, American producers feel the squeeze—but national oil companies in the Organization of Petroleum Exporting Countries, or OPEC, continue to be profitable.
So even though Trump has called for more drilling to lower domestic gasoline prices, American companies see little reason to pump more oil when prices are below the break-even point. The result reveals a paradox in the administration’s pursuit of what it calls “energy dominance”: It wants both lower prices and more drilling, but the former automatically discourages the latter.
“The goal of energy dominance is perhaps not fully aligned with the goal of low oil prices without significant innovation,” said Susan Bell, a senior vice president at Rystad Energy, an independent research firm, in an emailed statement. “Increasing U.S. production in a world that is oversupplied with oil in the near term would certainly drive prices down, ultimately making investment in the sector uneconomic.”
That disconnect has been on full display this year. Even as Trump promised boom times for the oil and gas industry, he has called on OPEC to increase production as a means to fulfill his promise to lower gasoline prices for Americans. In a January speech, he told OPEC to “bring down the oil price,” and in March he said that it was “very important that OPEC increase the flow of oil” in a social media post on X, the platform formerly known as Twitter.
The following month, OPEC announced it would increase production at a time when oil prices were already at a four-year low, taking industry analysts by surprise. While the move may have been an attempt to appease Trump, it was also an opportunity to assert dominance over American companies and increase the cartel’s market share. The increased production also acts as a buffer against price volatility by creating oversupply that can be tapped in times of crisis. There has been no shortage of the latter in recent years, with escalating conflict in the Middle East and the ongoing Russia-Ukraine war.
“All this extra supply creates a cushion,” said Trey Cowan, an oil and gas analyst at the Institute for Energy Economics and Financial Analysis, which tracks the rise of renewable energy and its impact on fossil fuels. “Events like the hunting down of people in Qatar by Israel—normally, that would be a crisis situation. Oil prices would spike tremendously. And while they did surge, they came right back down.”
Trump’s tariffs haven’t helped the U.S. fossil fuel industry either. His surcharges on steel and aluminum, two metals ubiquitously used in oil and gas infrastructure, have increased the cost of production. “The cost of our largest drilling input cost, casing, has increased over 10 percent in the last quarter due to steel tariffs,” Stice, the Diamondback Energy CEO, noted in his letter to shareholders.
Cowan said that, while oil prices rise and fall periodically, the industry is facing a highly volatile market at a time when gasoline demand is poised to take a hit from the growing adoption of electric vehicles. In its drive to find new markets, the industry invested heavily in refineries producing plastics. But there, too, the industry is now facing oversupply and slim profit margins.
“You’re running out of places to use the oil, so then you’re creating an oversupply condition that’s going to continue for a longer period of time,” said Cowan. “There is some expectation that oil prices could be lower for an extended period of time.”
