Company Executives in the Shale Oil Industry have warned that the "chaos" of tariffs from the Trump administration and policies that suppress Energy prices pose a threat to US Oil production, potentially undermining the "drill, baby, drill" Energy expansion agenda.

Despite Trump's promise to usher in a new era dominated by fossil fuels in the USA and to curb inflation by lowering Energy prices, the latest survey from the Dallas Federal Reserve shows that Shale Oil companies are scaling back drilling plans due to uncertainty stemming from trade policies and government rhetoric.

An anonymous Shale Oil producer stated in a report submitted to the Dallas Federal Reserve: "The government's chaos is a disaster for the CSI Commodity Equity Index market. 'Drill, baby, drill' is nothing but a myth and a populist slogan. Tariff policies are unpredictable and vague; we need more stability."

Another listed Company Executive wrote: "The key word describing the period from 2025 to now is 'uncertainty', which investors dislike the most." More companies have indicated that policy risks have forced them to hit the 'pause' button on investments upstream.

The quarterly survey report released by the Dallas Federal Reserve on Wednesday (covering major oil-producing regions like Texas and other parts of the Southwest) shows that even in the richest Shale Oil regions of the USA, extraction activities are on the verge of slowing down. In the survey of 130 companies, most executives in the Permian Basin reported a surge in uncertainty for the first quarter of 2025, with nearly one-third believing that the business outlook has worsened compared to the end of last year.

Executives clearly warned that if current oil prices around $70/barrel were to fall further, it would severely impact the Industry. Given the rapid decline characteristics of Shale wells, maintaining production requires continuous capital investment.

Hunter Kornfeind, a senior macro Energy Analyst at Rapidan Energy Group, pointed out: "The survey confirms the market's widespread doubts about 'drill, baby, drill'." He referred to Trump's tariffs as "additional costs" and stated that a $50 oil price would be Bearish for production: "If oil prices drop to $50, extraction activities across the USA will slow down, and production will peak and then decline."

Despite Trump's trade advisor Peter Navarro claiming this month that a $50 oil price helps curb inflation, and US Energy Secretary Chris Wright indicating to the Financial Times of the United Kingdom that the shale industry can still increase production at that price, shale oil companies are not convinced.

One respondent stated, "The government's threat of a $50 oil price has forced us to cut back on capital expenditures for 2025-2026." Another producer wrote, "'Drill, baby, drill' cannot coexist with a $50 oil price. If oil prices continue to fall, we will shut down production."

The Dallas Fed report noted that producers need an average oil price of at least $65 per barrel to be profitable. This disconnect between policy goals and industry reality is exacerbating anxiety within the shale oil industry.

Although shale oil giants were significant backers of Trump during last year's election, and the industry set profit and production records during former President Biden's tenure, the honeymoon period for both sides has ended. Trump fulfilled his promise to relax environmental regulations, swiftly repealing pollution laws from the Biden era, but his Steel and Aluminum tariffs (key raw materials for the shale oil industry) have caused a sharp increase in production costs, leading to a reversal in the industry's attitude.

A producer with over 40 years of experience wrote in a survey, "I have never felt such strong uncertainty in my career."