- The Dallas Fed’s latest energy survey revealed deep skepticism among executives toward President Donald Trump’s tariffs and oil-production agenda. In anonymous comments, respondents decried the uncertainty and higher costs of tariffs while predicting that trying to lower crude prices to $50 a barrel would reduce production instead of expand it.
In anonymous comments collected by the Dallas Fed, some US oil and gas executives didn’t pull their punches as they criticized key policies of President Donald Trump.
Most respondents decried the uncertainty and higher costs from his tariffs, while others said plans to sharply lower crude prices are incompatible with a major expansion in energy production.
“The administration’s chaos is a disaster for the commodity markets. ‘Drill, baby, drill’ is nothing short of a myth and populist rallying cry. Tariff policy is impossible for us to predict and doesn’t have a clear goal. We want more stability,” one executive said.
The White House didn’t immediately respond to a request for comment.
Trump has already slapped tariffs on China, Canada, Mexico, steel, aluminum and autos, while threatening duties on pharmaceuticals, chips, lumber and the European Union. He has said reciprocal tariffs will be unveiled on April 2, though he is reportedly pushing for even more aggressive levies and potentially a universal duty.
The on-again, off-again rollout of Trump’s prior tariffs has given businesses and consumers whiplash. Meanwhile, US refineries import oil from Canada and Mexico, while producers rely on imported metals for drilling operations.
Despite pumping record amounts of oil during the Biden administration, the energy industry largely backed Trump and celebrated his return to office.
But Trump officials have since targeted oil as part of their strategy to cool inflation and induce the Federal Reserve to lower interest rates. In particular, the administration has suggested crude at $50 a barrel, helped by a massive increase in supply from expanded production.
Now the honeymoon appears to be over, as the industry warns $50 a barrel wouldn’t be economically feasible.
“The threat of $50 oil prices by the administration has caused our firm to reduce its 2025 and 2026 capital expenditures. ‘Drill, baby, drill’ does not work with $50 per barrel oil. Rigs will get dropped, employment in the oil industry will decrease, and U.S. Oil production will decline as it did during COVID-19,” another oil executive warned.
Yet another said, “I have never felt more uncertainty about our business in my entire 40-plus-year career.”
To be sure, some respondents welcomed Trump’s shift away from climate-change policies and his openness to boosting exports of liquid natural gas.
But the overall tone was gloomy, and the Dallas Fed’s business activity index dropped to 3.8 in the first quarter from 6.0 in the fourth quarter
The company outlook index plunged 12 points to -4.9, suggesting pessimism among firms, and the outlook uncertainty index jumped 21 points to 43.1.
“The political climate caused by the new presidential administration appears to be creating instability. Energy markets are not exempt from the loss of public faith in all markets,” one executive said.
The Dallas Fed’s manufacturing survey last month showed that even in conservative parts of the country that voted for Trump, executives reported a collapse in business conditions amid tariff uncertainty.
That came after separate surveys from other regional Fed banks found deterioration in the economic outlook as well as plans for capital spending.
Meanwhile, consumers have turned negative too as Trump’s steep federal layoffs and tariffs weigh on their perceptions of the job market and inflation.
On Tuesday, the Conference Board’s latest survey revealed consumer confidence fell for the fourth consecutive month.
Notably, the survey’s expectations Index—which is based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 65.2, the lowest level in 12 years “and well below the threshold of 80 that usually signals a recession ahead.”