Trump Pushed for Lower Gas Prices and Got Them. The Oil Industry is Paying the Price.
Jake Conley · Breaking Business News Reporter
Updated Thu, February 26, 2026 at 3:45 AM MST
During his State of the Union address on Tuesday night, President Trump touted an energy industry strengthened by the success of his "Drill, baby, drill" policy, a dual mandate of more hydrocarbon drilling and lower gas prices.
A year into Trump's second term, oil and gas production is at or near all-time highs, and gasoline prices average below $3 per gallon nationally.
But for the US oil and gas industry, the president's ambitions have come at a cost.
"Capital efficiencies and returns drive our investment decisions," said an oil and gas operator responding to the Dallas Federal Reserve's fourth quarter energy survey.
"If economic conditions worsen, drilling and completion activities will cease in 2026."
The US produced 13.78 million barrels per day of oil in November, according to the most recent government data, just barely off the record high recorded in October. Daily dry gas production also hit its highest level on record in November after advancing nine straight months.
At the pump, where crude oil accounts for roughly 50% of the cost of a gallon of gas, Americans are seeing the lower prices Trump campaigned on.
But that record production and those low pump prices have come just as the global oil market has entered a period of deep oversupply of between 2 million and 3 million barrels per day — fundamentals that saw crude oil prices drop roughly 20% through 2025. Prices are up through the start of 2026, driven by geopolitical factors and an improved demand outlook. But they remain several dollars per barrel lower than they were a year ago, and as one respondent to the Dallas Fed survey said, "actual industry costs continue in one direction: up."
"Decreasing oil prices are making many of our firm’s wells noneconomic," another respondent noted. The same dynamic is playing out in the natural gas sector, where the energy product is "becoming an expense to operators," one survey respondent said. "Last month, we paid our gas purchaser to take our gas because prices fell below contract price, and we paid the difference to the purchaser. Never in my 50 years in the oilfield has this ever happened."
Activity in the oil and gas sector — which measures a variety of metrics such as employment figures and capex spending — has now declined for three straight quarters, according to the Dallas Fed, even as production has increased.
The effect is not confined to smaller independent oil and gas drilling firms, which are highly exposed to oil price fluctuations.
Even as Exxon Mobil (XOM) and Chevron (CVX), the country's largest integrated oil and gas operators, increased their production and beat analyst estimates on top-line revenue, both companies recorded year-on-year declines in annual profit as the oil glut depressed prices, shrinking their margins.
One sign that business is struggling in the US: Oilfield services firms such as Halliburton (HAL) and Calfrac Well Services (CFWFF) are increasingly sending their fracking equipment overseas, where demand is stronger, according to data from Primary Vision, first reported by Bloomberg.
The fracking bo-m of the early 2000s made the US the world's largest producer of oil and gas, but the shale industry has been struggling amid declining commodity prices. Nearly one-fifth of the fracking equipment deployed in Texas's Permian Basin has now been shipped overseas, the Primary Vision data shows.
"I think there's incentives to move equipment outside the US, which we're doing in some cases," Halliburton president and CEO Jeffrey Miller said during the company's fourth quarter earnings call in January. "I think the bias is towards, there's not investment in the [US] market in terms of more equipment and equipment is wearing out, which we know, and equipment, in some cases, is moving outside the US."
For the broader energy industry, the picture isn't all gloomy.
The US is about to enter the heavy driving season, when gasoline demand spikes, driving crude oil prices up, and January jobs data far exceeded expectations in another sign of transportation demand.
The federal government's Energy Information Administration now expects natural gas production to grow as new pipelines come online in the Permian basin, with prices expected to increase and incentivize more activity.
Yet, the count of drilling rigs in the US has decreased by roughly 7% year on year, according to data collected by the drill-field services firm Baker Hughes in late February. For US oil and gas upstream producers — the centerpiece of Trump's "Drill, baby, drill" ambitions — more drilling and lower gas prices may push their business the wrong way.
https://finance.yahoo.com/news/trump-pushed-for-lower-gas-prices-and-got-them-the-oil-industry-is-paying-the-price-100021352.html