END OF AN ERA?: Trump’s ‘Drill, Baby, Drill’ mantra meets maths as record US oil production falls

Call it Twilight in Texas.

Donald Trump’s favourite energy catchphrase, ‘drill, baby drill’, has long conjured visions of pump jacks furiously pumping, energy dominance achieved with sweat and swagger, and gasoline prices so low they’d make OPEC blush. 

But there’s one tiny flaw in that plan: oil companies don’t drill when it’s unprofitable. And with West Texas Intermediate (WTI) dipping below USD$60 per barrel last week, long-term profitability is looking more and more like a nostalgia act at a rock festival.

And with OPEC+ increasing production into a declining market, the end of US energy dominance could finally be at hand.

On Monday, the cartel in its monthly oil market report said it now sees demand for crude growing by 1.3 million barrels per day this year and next year, down about 150,000 bpd from its previous estimates. 

That was almost entirely due to a slowing global economy brought about as a result of Trump’s escalating trade war. 

"The global economy showed a steady growth trend at the beginning of the year," the group said. "However, recent trade related dynamics have introduced higher uncertainty to the short-term global economic growth outlook."

The result is that US oil production actually fell in January from its all-time peak of 13.5 million barrels per day (bpd) to about 13.1 million bpd or the lowest in 15 months, according to the US government’s Energy Information Agency (EIA), which is also facing chainsaw cuts from Elon Musk’s DOGE.

Even at that level, the US is still the world’s largest oil producer. But like an aging prize fighter, analysts now say Lower 48 shale production may have finally rolled over and began its long, inevitable decline.

That’s because US shale is a high-cost business that’s been riding a technological miracle wave, financed by a rising tide of borrowed money — more than $1 trillion in debt has been racked up to outrun the natural decline of shale wells over the past decade.

The result? Record-breaking production levels, but only as long as prices stay high. And oil price forecasts suggest those days may be numbered.

“The oil industry expected strong support from this White House, but there’s no way production will grow at $60,” Ben Cahill, energy analyst at UT-Austin, told Reuters. “Production growth is off the table unless the macroeconomic outlook improves.”

A big part of the problem is geological, as opposed to ideological. 

The Permian Basin, which accounts for nearly half of US oil output, has already seen its best prospects drilled. That means what’s left is either lower-yielding or more expensive to tap — a troubling reality for an industry now facing a double-whammy of soft prices and rising costs.

And the trade war isn’t helping.

Trump’s latest round of tariffs — including a surprise 50% hit on Chinese imports — sent oil prices to their lowest levels since the height of the COVID-19 pandemic in 2021. 

Goldman Sachs, ever the market realists — when it’s not outlandishly bullish — last week reversed its initial Trump-fuelled optimism and slashed its 2026 price forecast to below $60 on fears of a US recession.

If that wasn’t ominous enough, S&P Global sees US onshore production falling by over a million barrels per day if prices drop to $50 and stay there.

So much for Trump’s dream of ‘energy dominance’.

“‘Drill, baby, drill’ is nothing short of a myth and populist rallying cry,” said one anonymous oil executive in the Dallas Federal Reserve’s latest oil patch survey — which also found a spike in the so-called ‘uncertainty index’ and a corresponding increase in production costs.

“There cannot be US energy dominance and $50 per barrel oil… those two statements are contradictory.”

Oil, after all, runs on economics not campaign slogans.

The irony? Trump’s celebration of low oil prices might just bring the US energy boom to a screeching halt.

Not because America can’t drill, but because it simply can’t afford to.