Editorial: Policy wanted. Apply here.

It was always going to be costly and hard to increase already record levels of US oil and natural gas production as available Tier 1 Permian inventory wanes. But a combination of nearly continuous policy uncertainty and a softening global oil market has only made it harder.

West Texas Intermediate (WTI) crude prices of $66.71/bbl as of Mar. 13, 2025, had fallen 12% since the inauguration of US President Donald Trump roughly 2 months earlier and domestic oil output has plateaued. Members of the Trump administration have since touted the possibility of $50/bbl oil as if it’s a good thing.

Short of the emergence of an actual US trade policy, what would be useful right now is if those with knowledge of what 'the plan' is start sharing it.

A continued weak price environment will not motivate producers to increase output, but the stage is being set for exactly that, as the threat of recession looms increasingly large. Long-simmering concerns about softening oil demand in China have been exacerbated by the threat of an emerging trade war putting the brakes on the global economy. Add recently announced OPEC+ plans to increase production and the likelihood of across-the-board cost increases (including for steel) driven by that same trade war, and it’s hard to imagine an environment less hospitable to US production growth.

The industry’s most influential trade organization, the American Petroleum Institute has urged both its members and the broader energy community to “not overreact” to the chaos, intimating a belief that it’s all part of some master plan on the part the Administration. Shreds of evidence exist that this might be the case. Tariff carve outs for energy, called for in this space just 2 months ago, are starting to happen.

Energy imports from Canada were initially only going to be taxed at 10% instead of the broader 25% rate and at the time of this writing had been cut altogether. But the possibility of further prevarication continues, and endless flip-flopping itself has cut deeply into companies’ ability to plan effectively.

Scattered perspectives

One solid indicator of exactly how far the US oil and gas landscape is from having a reliable set of parameters for action is the differing reactions of even some of its largest companies. Harold Hamm, founder and chairman of super-independent Continental Resources Inc., has noted that the breakeven price for some wells is already as high as $80/bbl and that $50/bbl is “below the point” at which ‘drill baby, drill’ is feasible. And this despite Hamm’s major financial support for Trump’s 2024 campaign. Wood Mackenzie analysts concur, noting that “a prolonged $50/bbl price [for WTI] would result in immediate production declines.”

ExxonMobil Corp.’s vice-president for upstream unconventional, Bart Cahir, meanwhile, has indicated by contrast that the company “can still turn a profit with prices as low as $35[/bbl].” ¹ Scott Sheffield, former chief executive officer of Pioneer Natural Resources, is somewhere in the middle, asserting that $50-55/bbl is sufficient to cover costs, turn a small profit, and continue to pay dividends.

Short of the emergence of an actual US trade policy, what would be useful right now is if those with knowledge of what ‘the plan’ is start sharing it; if not details of the plan itself at least some good solid indicators that it exists. The industry can and has survived any number of adverse governmental approaches to its development and regulation. But until now, it has always at least had a playing field with discernible and reasonably static boundaries.