Title: Five Strategies for Implementing Energy Independence under President Trump
With media whispers suggesting that the incoming Trump administration's energy dominance agenda, particularly its promises of significantly expanding U.S. oil and natural gas production, might be a pipedream, skeptics argue that the President-elect's plans will collide with the harsh realities of the industry. These critics point out that U.S. output is already at record highs, the shale basins that propelled America to the top tier of global energy producers over the past 15 years are now aging, and the federal government cannot compel private companies to drill when market conditions are unfavorable.
However, there are ways the administration can boost production beyond current projections. Market forces remain the primary movers of drilling decisions, and U.S. shale resources have become more expensive to develop as the best acreage has been depleted. According to the U.S. Energy Information Administration (EIA), domestic oil production is projected to increase by around 300,000 barrels per day in 2025—reaching 13.52 million barrels per day—before leveling off in 2026. A similar trend is expected for natural gas output.
The challenge lies not in resource availability but in ensuring industry profitability. Energy companies won't invest in exploration and production if it's not lucrative for their shareholders. In the Permian and Eagle Ford basins—two of the most productive oil-producing regions in the United States—breakeven prices hover between $56 and $66 per barrel, well above the average U.S. benchmark West Texas Intermediate (WTI) crude price of $76 per barrel in 2024. With WTI expected to drop to $70 per barrel this year, tight economic margins add pressure. Any deviation from capital discipline or weaker financial returns could spur negative reactions from investors.
Yet, government policy can meaningfully shift the economics of oil and gas exploration. Here are the most critical policy levers the new administration can pull:
Deregulate
Deregulation, a hallmark of Trump's first term, involved rewriting or revoking numerous energy- and climate-related rules. The Biden White House, however, imposed higher federal royalty rates, raised bonding requirements on oil and gas leases, and instituted new limits and fees on methane emissions—all measures that encroach on industry profits. Starting next year, operators could face a $900-per-metric-ton fee for methane emissions exceeding statutory limits detailed in the 2022 Inflation Reduction Act (IRA). The Trump administration, with Republican majorities in both chambers, could attempt to revise or eliminate those methane rules. Reducing Biden-era bonding requirements and easing consolidation rules would also free up capital.
Streamline Permitting
Another top priority for a Republican-controlled Congress is permitting reforms for fossil fuel projects. Though new regulations alone can't force energy companies to drill, streamlined permitting can facilitate pipeline construction and other midstream projects that expand market access. This is essential for both oil and gas producers because gassier wells—especially in mature shale basins—need sufficient pipeline capacity to ensure associated gas can fetch adequate prices. Faster permitting for pipelines and other infrastructure would help alleviate bottlenecks, thereby improving the economics of drilling in maturing shale basins.
Push for LNG Exports
On the campaign trail, Trump pledged to expedite approvals for liquefied natural gas (LNG) export projects—overturning what he called the Biden administration's "freeze" on permits. This policy shift would boost investor confidence and create additional demand for U.S. natural gas, stabilizing prices and lifting profits for upstream producers.
Expand Drilling Opportunities
Trump will likely open additional onshore and offshore acreage to drilling, which signals a renewal of industry friendliness and reaffirms America's commitment to long-term energy development.
Exercise Tariff Caution
Tariffs pose a threat to U.S. energy producers. Broad-based tariffs could potentially damage global oil demand, lower oil prices by $5 to $7 per barrel, and raise steel costs for rigs and pipelines. Tariffs on imported oil could harm refiners who depend on foreign oil for roughly 40% of their feedstock, raising gasoline and diesel prices.
Market forces, global economic conditions, OPEC+ policy decisions, and Asian consumption trends will ultimately dictate drilling programs and production growth. Even if the Trump administration executes all of these moves, market forces will remain dominant. However, by skillfully executing these levers, the administration can significantly improve the industry's profitability, unlock new reserves, and extend America's energy dominance.
- Critics question if Donald Trump's energy dominance agenda, which includes expanding U.S. oil and natural gas production, will face challenges due to the industry's realities.
- The Trump administration can boost production beyond current projections by considering government policies, as U.S. shale resources have become more expensive to develop.
- Deregulation, a key policy lever for the new administration, could involve revoking energy-related rules to benefit the industry, as Biden-era measures have encroached on industry profits.
- Pushing for LNG exports, as promised by Donald Trump during his campaign, could stabilize natural gas prices and lift profits for upstream producers.
- Republican-controlled Congress could help streamline permitting for fossil fuel projects, alleviating bottlenecks and improving the economics of drilling in maturing shale basins.
