The Trump administration hopes to reduce oil prices to $50 per barrel or even lower, but this policy may benefit US consumers while impacting the USA Energy Industry that Trump aims to expand.

During his campaign, Trump often stated that a gasoline price of $1.87 per gallon - equivalent to $20 per barrel of Crude Oil Product - is "a perfect price, an absolutely wonderful number." Recently, the debate about the oil price level desired by the Trump administration has intensified. White House trade advisor Peter Navarro stated that if oil prices drop to $50, it would help curb inflation.

Influenced by OPEC+'s announcement to gradually increase production, the international benchmark Brent Crude Oil price fell to $68 per barrel last week, the lowest in three years. However, Analysts warn that if oil prices further drop significantly, the US government's goal of increasing oil production by 3 million barrels per day by 2028 may be difficult to achieve.

"A $50 oil price will harm the USA more than benefit it, and will certainly not support the USA's increase in oil production, which is exactly what Trump wants," said Rystad Energy's chief economist Claudio Galimberti. "These two goals are contradictory."

The last time Brent Crude Oil prices fell below $50 was during the COVID-19 pandemic in November 2020, while the last time US gasoline prices dropped to $1.87 per gallon was in May 2020.

US Energy Secretary Chris Wright stated to reporters this week that the government has not set a target for crude oil prices. However, he reiterated that even if oil prices drop to $50, US oil companies would still be able to increase production by relaxing regulations and reducing production barriers. He stated that the government's goal is "to encourage capital investment and reduce Infrastructure costs, making it easier for companies to make decisions on drilling and increasing production. More supply will lead to lower prices and more market opportunities."

In the past decade, the explosive growth of Shale Oil production has changed the impact of low oil prices on the US economy. In 2012, the USA's daily crude oil production was only 6 million barrels, while last year it surpassed 13 million barrels, making it the world's largest oil producer and net exporter. Historically, falling oil prices were Bullish for the US economy, but now, while reducing costs for consumers, they also compress revenues in the Oil Industry.

S&P Global Commodity Insights estimates that this year the average breakeven price for US Shale Oil producers is around $45 per barrel. Many Analysts and oil executives state that an oil price of $50 means many US Shale Oil producers will be unprofitable and struggle to continue increasing production.

Paul Horsnell, head of commodity research at Standard Chartered Bank, stated that "a $50 oil price would be a victory of 'penny wise, pound foolish.' In certain areas of the Delaware and Midland basins, Shale Oil may still be profitable, but in places like Oklahoma, the Rockies, Bakken, and South Texas, production activities will be difficult to sustain."

Dunn County in North Dakota heavily relies on oil tax revenue, with 84% of voters in the area supporting Trump in the last election. Dunn County commissioner Tracy Dolezal said, "It sounds contradictory. If oil prices drop, we will see economic activity slow... this will affect fiscal revenue."

The Trump administration simultaneously imposed tariffs on key raw materials such as Aluminum and Steel, further raising oil production costs, while encouraging oil companies to "Drill Baby Drill." Morgan Stanley's Global Oil strategist Martijn Rats pointed out, "These policies actually raise the breakeven point rather than lower it."

Scott Sheffield, one of the pioneers of the US Shale Oil revolution, stated that a $50 oil price will force US Shale Oil companies to cut production, allowing OPEC countries to seize market share and push up oil prices in the future. "This will give OPEC and Saudi Arabia greater market control by 2030," he said, "I really think they have not thought through the consequences. It's good for the Consumer, but a disaster for the US Energy Industry."

Trump is expected to continue pressuring OPEC+ to accelerate production increases, but the organization is unlikely to allow oil prices to fall to $50/barrel without taking intervention measures. "A $50 oil price will be a significant issue for OPEC+," Galimberti stated, adding that OPEC+ could suspend or reverse production increase plans at any time.

According to estimates by the International Monetary Fund (IMF), Saudi Arabia needs oil prices close to $100/barrel to balance its fiscal budget, while Russia relies on oil export revenues to fund the Russia-Ukraine conflict.

Wright expressed strong support for energy companies at the largest annual oil industry conference in Houston this week: "We need more Energy, a lot of Energy." His remarks received enthusiastic applause, but privately, many executives were skeptical. They are concerned about the uncertainty of government policies and the Trump administration's desire to lower oil prices.

A person attending the conference dinner stated that half of the attendees cheered while the other half remained silent. Some complained, saying, "Those who dislike this policy are now too afraid to voice their opinions."