President Donald Trump has often made clear his goal of cutting prices for energy as part of his overall agenda to break the back of chronic inflation left behind by the Biden presidency. When talking about this goal, the president has placed special emphasis on lowering the price of crude oil, given its integral relationship to gas prices at the pump and transportation-related costs which go into the price of food, clothing and other consumer goods.
“A very big thing that I’m very happy with is oil is down,” Trump said in remarks in the Oval Office on Wednesday. “We’re getting that down. When energy comes down, prices are going to be coming down with it. So, in a very short period of time, we’ve done a very good job.”
White House advisor Peter Navarro has been quoted by The New York Times and other media outlets as saying that an average oil price of $50 per barrel would help tame inflation and set the stage for a return to a healthier economy. If that is indeed the goal, this week’s confluence of events, featuring a bigger-than-expected increase in oil production quotas from the OPEC+ oil cartel preceded less than 24 hours earlier by the president’s announced reciprocal tariffs on a wide array of countries went a long way to doing the trick.
Just prior to Trump’s tariff announcement Wednesday afternoon, the price for West Texas Intermediate crude stood at $70/bbl. Less than 48 hours later, the price had fallen below $61, a drop of about 15%. It was the largest 2-day decline in crude prices since 2021. How much of the price decrease is due to the tariffs as opposed to the OPEC+ agreement to pour another 137,000 barrels per day onto the international market is hard to know, but there is no doubt both actions had an impact.
As I’ve noted previously, this action to force lower prices for oil and natural gas lies directly at odds with the concurrent Trump “drill, baby, drill” objective which he sees as a key part of his American Energy Dominance agenda. The White House gave a nod to the oil refining segment in the Wednesday tariff announcement by exempting energy imports, another action at least in part aimed at lowering prices for gasoline and diesel fuel.
But that nod to the downstream segment does little for upstream companies who have seen supply chain muck-ups and Biden-era inflation raise break-even prices above Friday’s levels. The Q1 2025 Energy Survey Report published March 26 by the Dallas Federal Reserve estimates that drillers in the Permian Basin require a $61 oil price just to break even on drilling new shale wells. The needed breakeven price rises higher in other, less prolific basins. CNN quoted independent oil analyst Andy Lipow as saying that many upstream companies require prices closer to Monday’s $71/bbl level for new shale wells. It almost goes without saying that operators will have little incentive to “drill, baby, drill” if they stand to lose money doing it.
In an interview with Fox Business host Stu Varney on Tuesday, Energy Secretary Chris Wright, himself a former oil industry executive, said, “If your state has expensive energy, it’s because of choices made by politicians in those states to virtue signal somehow they’re on some global mission. They’re going to solve climate change by making your utility bills more expensive and your businesses want to relocate out of the states. That’s just nonsense.” He added that Trump was pursuing energy policies based on common sense, saying, “common sense will deliver more investment in our country and lower energy prices.”
No doubt, few executives in the industry would agree that a pursuit of $50 oil prices has anything to do with common sense for their companies. If prices should drop that far and linger there for any length of time, layoffs and idled drilling rigs will become the prevailing topic of the day in oil and gas.
So, while the White House might continue touting its “drill, baby, drill” slogan for the time being, we won’t hear it echoing through the barbecue and Tex-Mex joints in Midland, Texas, for the time being.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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