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Trump’s Call for Increased Oil Production Faces Investor Skepticism
President Donald Trump has reiterated his encouragement for oil producers to “drill, baby, drill.” However, it seems that many U.S. oil and gas investors may not fully support this directive.
Clark Williams-Derry, an energy finance analyst from the Institute for Energy Economics and Financial Analysis, observes that with current low oil prices, many companies are likely to reduce their capital investments. “Right now, with low oil prices, I think we’re going to start to see a lot of companies starting to pare back on their capital spending,” he noted.
As it stands, the United States is achieving unprecedented levels of crude oil production, having surpassed any previous production records. By December 2024, U.S. oil and gas firms were generating over 13.49 million barrels of crude oil daily, marking a historic peak according to U.S. Energy Information Administration data.
While high production levels tend to bring consumer prices down, there is a crucial balance to maintain. If oil prices plummet excessively, the profitability of these producers is affected, which could lead them to curtail drilling activities.
Oil price fluctuations significantly impact American consumers, primarily visible through the prices at gas stations. As of March 24, 2025, the average retail price for regular unleaded gasoline in the U.S. was approximately $3.10 per gallon, a stark contrast to the peak of over $5 per gallon experienced in June 2022, as reported by GasBuddy.
Looking ahead, the U.S. Energy Information Administration predicts a decrease in gasoline prices of 11 cents in 2025 and 19 cents in 2026, which could provide some relief for consumers.
In 2023, crude oil prices constituted about 52.6% of the average retail gasoline price, according to the most recent statistics from the EIA. This relationship underscores the importance of crude oil price trends for those invested in the oil and gas sector.
The direction of crude oil prices is proving to be a pivotal issue for industry investors. On March 24, 2025, the spot price for West Texas Intermediate, the U.S. benchmark for crude oil, was reported to be just under $70 a barrel. Analysts from S&P Global Commodity Insights project that WTI will average $66 per barrel in 2025.
As global oil prices decline, the impact on the profitability of oil and gas firms becomes increasingly pronounced, since their revenues are tied to international market rates. A survey conducted by the Federal Reserve Bank of Dallas in March 2024 indicated that producers would need to achieve a breakeven price of around $64 per barrel to remain profitable when drilling new wells.
“This is a real challenge to get oil prices at a level that producers are comfortable with, but also that consumers can live with,” Williams-Derry emphasized.
Watch the video above to learn more about Trump’s second-term energy policies
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