Unlock the White House Watch newsletter for free
A guide to what the 2024 US election means for Washington and the world.
The author is Research Director and Co-Founder of Energy Aspects.
There is now widespread belief among many in the energy market that President-elect Donald Trump will probably succeed in lowering oil prices even more than they did during Joe Biden’s term.
Brent crude oil has been languishing in the $70 range for months. This is despite the OPEC+ group of countries agreeing at their last meeting to slow planned production increases and eliminate much of the surplus expected in 2025. This is also despite President Trump’s likely hawkish stance toward Iran, which will likely lead to a reduction in the country’s oil availability. According to our data, despite sanctions, Iranian crude oil and condensate exports reached 1.8 million barrels per day under the Biden administration, compared to 0.4 million barrels per day under the Trump administration.
Team Trump appears to believe that freeing up U.S. production will lessen the impact of higher prices from lost Iranian oil. The problem is low energy prices and record domestic oil and gas production, as U.S. shale producers need higher prices than eight years ago to support investment in oil’s gradual growth. It is impossible to achieve both. But more fundamentally, increased U.S. production is increasing gas concentrations. The country’s energy production will continue to grow strongly, but it may not have the same impact on oil prices as before.
The administration cannot realistically add nearly 3 megabytes of black oil per day over the next four years, as President Trump’s Treasury nominee Scott Bessent has argued. This is not a regulatory issue, it’s a resource issue. We do not have enough green barrels on hand to cover this production. Crude oil production is expected to increase by only 0.4 million barrels per day over the same period. This would represent a 3% increase from current levels.
The White House has only a few tools at its disposal to encourage faster supply increases. Additional federal land leases may become available. But the inventory of unleased onshore land is limited, and offshore leases can require a decade of work before the first barrel is pumped. Reforming the permitting system for new energy projects could theoretically speed up drilling on already leased federal land, but legal, environmental and tribal considerations make it difficult even if Republicans control Even Congress could prove difficult to implement.
Some content could not be loaded. Please check your internet connection or browser settings.
Easing gas pipeline permitting procedures could allow for more production in Pennsylvania. And ending the suspension of LNG export licenses introduced by Biden could boost international sales of gas from the United States toward the end of the decade. Subsidies would be politically unpopular, but tax changes would help struggling U.S. producers. However, growers are already suggesting that growth will be limited. Chevron, a large and rapidly growing producer in the Permian region in recent years, has cut its planned investment spending in the region in 2025 and expects oil production growth to not accelerate. Rather, growth will slow to single digits. Most of Chevron’s Permian growth next year will come from acreage in New Mexico, which produces relatively more gas and natural gas liquids such as propane than oil.
One potential upside to watch could be private equity-backed production. Lower interest rates and recent signals from OPEC+ could encourage this expansion. But publicly traded companies like Chevron are still under pressure from investors to rein in spending in favor of shareholder returns.
Consolidation in the Permian is also slowing oil development as larger groups buy up smaller groups and add prospects to their inventories of future projects. Production in secondary shale basins such as the Bakken in North Dakota/Montana and the Eagle Ford in Texas is also expected to decline as producers move beyond top-tier acreage.
Gas and natural gas liquids as additional LNG export capacity under construction increases demand on the Gulf Coast, pushing prices higher and spurring a return to growth in the Appalachian region and the Louisiana/Texas basin around Haynesville. is expected to grow even more rapidly. We also see gas and NGLs growing much faster in the Permian and basins where the population of old shale wells is increasing. As these wells get older, they tend to produce more gas than oil.
Therefore, we project that gas production will increase by 10 billion cubic feet per day over that period (through 2028) and NGLs will increase by 0.6 megabytes per day. This translates to an oil-equivalent output of 2.7 mb/d in terms of energy content. In other words, the 3 mb/day Bessent mentioned is actually 3 mb/day of oil equivalent per day, and the “oil equivalent” is doing most of the work.
Jesse Jones, Head of Upstream at Energy Aspects, contributed to this column
