The latest energy survey from the Dallas Fed unveiled strong doubts among executives regarding President Donald Trump's tariffs and oil-production plans. In comments gathered anonymously, respondents expressed concerns about the unpredictability and increased costs resulting from tariffs. They also predicted that efforts to bring crude prices down to $50 per barrel would hinder production rather than boost it.
According to feedback received by the Dallas Fed, some oil and gas executives in the US were frank in their criticism of key policies implemented by President Donald Trump.
Many respondents highlighted the instability and higher expenses caused by his tariffs, and some mentioned that strategies to significantly decrease crude oil prices are inconsistent with a substantial expansion in energy production.
One executive remarked, "The disarray within the administration is negatively impacting the commodity markets. The 'Drill, baby, drill' slogan is more of a myth and a populist outcry. The tariff policies are unpredictable and lack a clear objective. What we seek is more certainty and stability."
The White House did not provide an immediate response when asked for comment.
Trump has imposed tariffs on China, Canada, Mexico, steel, aluminum, and automobiles, while also threatening to introduce duties on pharmaceuticals, chips, lumber, and the European Union. He has indicated that reciprocal tariffs will be disclosed on April 2, with reports suggesting he is leaning towards implementing even more aggressive tariffs and potentially a universal levy.
The fluctuating implementation of Trump's earlier tariffs has left businesses and consumers uncertain. At the same time, US refineries rely on importing oil from Canada and Mexico, while producers depend on imported metals for their drilling activities.
Despite achieving record oil production levels during President Biden's term, the energy sector had largely supported Trump and welcomed his re-election. However, Trump's administration has now turned its focus on the oil industry as part of its efforts to combat inflation and encourage the Federal Reserve to reduce interest rates. They have proposed achieving a $50 per barrel crude price through a substantial supply increase stemming from expanded production.
However, there are growing concerns within the industry that aiming for $50 crude oil prices may not be financially viable. One executive warned, "The prospect of $50 oil prices as set by the administration has led our company to reduce its capital expenditures for 2025 and 2026. 'Drill, baby, drill' is not viable with $50 per barrel oil. Rig operations are likely to decrease, oil industry employment will drop, and US oil production could decline as it did during the COVID-19 pandemic."
Another executive expressed, "I have never experienced so much uncertainty regarding our business throughout my career of over 40 years."