The shale boom is not a gift from Donald Trump.
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Cutting red tape, freeing up, cutting corners – these are all business-friendly policies. They work wonders on industries that were previously bound by regulations. But there is little evidence that this has been the case for US fossil fuels. That suggests the efforts of President Donald Trump Expediting oil and gas projects Not a flood, but not a flood.
Oil producers have been “drilling, baby, drilling” for a long time. In the year In 2024, US oil production averaged 13.2 million barrels per day, making it the world’s largest oil producer. This is two and a half times the country’s production in 2008. U.S. gas supplies also roughly doubled during that time.
It’s true, this neck-breaking can’t go on forever. The industry will add an average of 270,000 barrels per day in 2025 and 2026, about a quarter of what it squeezed in 2023, according to consultancy Argus Media. But that mostly reflects the fact that the best acreage was already there. He was exploited.
Trump’s policies, like encouraging drilling in US coastal waters, open up new territories. Although they contain exploitable resources, the time it takes to develop a project is longer than one four-year presidential term. This is not a short-term fix.
Unfortunately for Trump, it’s not red tape that’s blocking the flow of oil, but low prices. Production of oil from US shale formations is relatively expensive. Companies will need prices of $60 to $80 a barrel if they want to cover all their costs and pay dividends, estimates Christopher Witten at Stifel.
Shale is also very sensitive to commodity price movements because, unlike traditional projects where most of the costs are incurred up front, shale production requires constant spending to maintain production. For example, in A record low price for U.S. natural gas in 2024 has led to production cuts.
That would rather limit Trump’s room for maneuver, at least in oil. Gas may react slightly more if there is at least strong demand from data centers and hopes that the resumption of LNG export licenses could boost domestic prices. That will help producers to ensure more supply.
As it stands, the oil market is not very close. A fragmented China translates into weak demand. It is worried enough that OPEC+, which wants to keep prices high, is actively restricting supply. That means any increase in U.S. oil production could lower prices and last for a short time. The only thing that explodes in the oil patch is speech.
camilla.palladino@ft.com