Donald Trump’s call for a new oil boom will be thwarted by Wall Street’s reluctance to approve more drilling, shale bosses have warned.
Total US oil Output in Trump’s second term will rise by less than 1.3 million barrels per day, Rystad Energy and Wood Mackenzie said, well below the 1.9 million b/d increase achieved under Joe Biden and much less than during the shale Bonanza years in the previous decade.
Executives said pressure from investors on companies and the economic reality of a sector always watched by oil prices will be obstacles to Trump’s bid to usher in an era of “American energy dominance.”
“Incentive, if you will, just drill, kid, drill . . . I just don’t believe companies are going to do it,” said Wil Vanloh, chief executive of Private Equity Group Quantum Energy Partners, one of the largest investors in the shale sector.
“Wall Street is going to 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 that run these companies to go ahead and drill more wells,” Vanloh said.
The reality on the ground could be a disappointment for Trumpwho’s betting that a big jump in oil supply can beat US inflation by making goods and fuel cheaper.
“We’re going to bring prices down. . . . We’re going to be a rich nation again, and it’s the liquid gold under our feet that’s going to help us do that,” the president said in his inauguration speech on Monday.
In Davos on Thursday, he also called on the OPEC cartel to lower oil prices, suggesting that this would allow central banks to cut interest rates around the world “immediately”.
But lower oil and gas prices would make shale companies less profitable — and less likely to follow Trump’s order to “drill, baby, drill,” executives warned.
“Prices will be a bigger signal than politics,” said Ben Dell, managing partner at Kimmeridge, an energy investment firm that owns shale assets, including in Texas’ Permian Basin, the world’s most prolific oil field.
After U.S. oil production hit a record high last year, the Energy Information Administration expects production to rise just 2.6 percent to 13.6 million b/d in 2025 before rising by less than 1 percent in 2026 due to price pressure.
Some shale producers are also concerned that the best locations were awarded after more than a decade of drilling exploration in states like Texas and North Dakota.
After his swearing-in ceremony this week, Trump signed executive orders to “unleash” new oil and gas supplies and declared a “national energy emergency.” He also moved to roll back Biden-era regulations that drillers say have increased their costs and limited activity.
But executives warned that even Trump’s full-throated support for fossil fuels and deregulation could have limited impact.
“How favorable the incoming administration is about energy and strength. . . We don’t see a significant change in the level of activity going forward,” said David Schorlemer, chief financial officer of Permian oilfield services company Propetro.
The producers’ malaise comes after two decades of soaring growth — and sometimes punishing volatility in oil prices.
U.S. oil and gas production has exploded over the past 15 years as drillers have found ways to unlock vast deposits locked in shale rock. Wall Street financed the drilling race that made the US the world’s largest oil and gas producer.
But brutal prices in 2014 and 2020 triggered widespread bankruptcies, a more cautious approach by investors and a change in producer behavior – especially despite softer crude oil prices.
A recent study by the Kansas City Federal Reserve found that the average US oil price needed to significantly increase drilling would be $84 a barrel, up from about $74 a barrel today.
JPMorgan predicts US oil prices will fall to $64 a barrel by the end of this year and shale activity will “slow to a crawl” in 2026.
“If prices are anemic, you can remove all the act tape you want. It’s not going to move the needle on production,” said Hassan Eltorie, director of companies and transactions research at S&P Global Commodity Insights.
America’s second largest oil producer Chevron – a major shale investor – plans to cut spending this year for the first time after the pandemic Petroleum oil, $14.5 billion-$15.5 billion budget for 2025, down from $15.5 billion-$16.5 billion last year. Exxon, by comparison, will raise its Capex in the coming years.
Conocophillips expects to cut spending by $500 million from last year, and Occidental Petroleum and EOG Resources are expected to keep activity levels roughly flat — decisions intended for busy Wall Street.
“Shareholders of these energy stocks. . . If you do more [capital spending] What they would enable is going to scream bloody murder and sell your stock,” said Cole Smead, CEO of Smead Capital Management, which invests in several oil companies, including Chevron and Occidental Petroleum.
