President Donald Trump wants to “unleash” American energy. The problem: U.S. oil production growth is starting to dwindle.
The nation’s once-hot shale plays are maturing. It’s getting more expensive to get significant amounts of new oil out of the ground. Some observers expect production to level off in the coming years and then start to decline by the early 2030s.
Soon enough, oil companies may need to “drill, baby, drill” just to keep up current production levels rather than boosting them. Trump is calling for “energy dominance,” yet for many in the oil patch the debate is not whether U.S. oil production is hitting its peak, but when and how fast.
“We’re 17, 18 years into the U.S. shale story,” said Brandon Myers, head of research at Novi Labs, an Austin, Texas-based research firm that uses artificial intelligence to analyze the economics of wells. “It does have an end.”
Right now, the U.S. oil industry is producing more crude than ever before — north of 13 million barrels a day — and the price of gasoline is slightly higher than $3 a gallon, hovering near a three-year low. So it may be hard to realize the type of production increases Trump suggested on the campaign trail, where he boasted that within 18 months he’d cut energy prices in half.
“That presumes that you can press a button and get even more out of those rocks than ever for an extended period of time,” said Barry Rabe, a professor emeritus of environmental policy at the University of Michigan. Pulling that off, he said, is “sort of a triple bank shot.”
When asked whether declining shale fields could interfere with Trump’s “energy dominance” plans, a White House spokesperson sent a statement saying “President Trump took decisive action on day one to immediately reverse the shortsighted policies of the previous administration and unleash American energy.”
Nationally, oil production might creep up in the next couple of years, driven by drilling in West Texas and eastern New Mexico. But other once-booming plays in places like Colorado, South Texas and North Dakota are flat or declining.
Barring a big technological revolution in drilling — some suggest leaps in AI might deliver one — the United States’ position as an oil powerhouse could be challenged in the years ahead.
Some analysts say it will be 10 years or more before production starts to plateau. Others say it has already started. For its part, the U.S. Energy Information Administration predicted last week that the country’s oil production will grow a little more than 3 percent in 2025 to 13.7 million barrels a day, but then climb less than 1 percent in 2026. The report reversed a previous forecast that production would drop slightly in 2026.
EIA’s outlook last week also suggested that Trump’s price-cutting goal might be tough to achieve. The agency projected oil prices dropping by 2026 because of reduced demand and increased foreign production, but by only about 20 percent, compared to 2024. EIA projected natural gas prices could nearly double in the same time frame.
Shifts in the industry have already been driving change in the board rooms of oil and gas companies, said Jennifer Miskimins, professor and head of the Petroleum Engineering Department at the Colorado School of Mines.
“A lot of the mergers of companies have been because they’re buying inventory, so they have places to go outside of what they currently have,” she said.
Decades of gas
Natural gas, however, is not seeing the same trend. The lower-quality wells that companies are drilling have more gas coming up with the oil, to the point that gas is sometimes valued below zero. And there are vast stores of gas still available to be tapped. Gas production is limited less by geology than the availability of pipelines to pump it to market.
The country, Myers said, has “decades, decades and decades” of gas supply left.
The United States burst onto the global oil and gas production scene in the 2010s after years of fretting about its dependence on foreign oil.
A suite of technologies lumped together as hydraulic fracturing — or fracking — opened up vast reserves of natural gas in shale formations all around the country. Geologists had long known there was oil and gas in the shale rock. But the petroleum wasn’t worth the effort until companies perfected advances in cracking open the dense formations with high-volume fracking and sideways drilling.
The ensuing wave of drilling for oil and gas turned formerly sleepy communities like Williston, North Dakota, into boomtowns; revived the oil industry in West Texas; and created huge profits for oil and gas companies in Houston and elsewhere.
It also pushed down natural gas prices for utilities and their customers, and cushioned drivers from gasoline price shocks when conflict and catastrophes rocked petrostates. In time, the shale business shifted the United States from one of the biggest importers of oil to being the world’s largest producer of crude oil.
Trump and the authors of the Project 2025 report, written as a guide for a conservative administration, have been accusing the Biden administration of waging a war on domestic oil production. If so, Biden wasn’t winning. As he left office, oil companies were raking in robust profits and the country was producing more oil than any country in the history of the world.
Instead, it is the rocks themselves that now stand in the way of increased oil production.
Contrary to what Trump said in his inaugural address, the U.S. doesn’t have “the largest amount of oil and gas of any country on Earth.” It may be producing more oil than any other country, but it’s pulling it from reserves about a third the size of Saudi Arabia’s.
After years of drilling, the top-quality U.S. wells that produce the most oil for the least money are increasingly hard to find. More and more, producers are left to weigh the economics of second- and third-tier wells.
‘On a treadmill’
The exception to the trend of diminishing shale plays is the Permian Basin in southeast New Mexico and West Texas. It’s been driving U.S. production growth for several years. But even there the rate of growth is already slowing.
“You’re on a treadmill where all the existing wells are declining,” said Mukul Sharma, professor of petroleum engineering at the University of Texas at Austin. “And you’re trying to catch up with doing new drilling or doing playing new tricks with old wells, and that’s usually a losing battle.”
Still, Sharma’s take is that the country has a decade or more before production levels decline. And Stephen Sonnenberg, a petroleum geology professor at the Colorado School of Mines, finds the reports of national decline in some quarters to be exaggerated.
“Production is not significantly growing,” Sonnenberg said, “but it’s not going down.”
The U.S. oil industry has been down many times before, he said, but has always managed to fight its way back. He expects new innovations will help the domestic oil industry find more efficient ways to produce.
Mike Sommers, CEO of the American Petroleum Institute, the oil industry’s largest trade group, points to advances in AI.
“I believe AI could be the next big fracking revolution,” Sommers told reporters last month. AI, though, is also producing some of the predictions of decline.
Meanwhile, Sommers said, the maturing shale plays show the need to make federal permits easier to get, which means cutting environmental regulations. And he said companies need to be able to keep searching for more places to drill, particularly in Alaska and the offshore areas the Biden administration put off-limits shortly before leaving office.
The API did not respond to a request for comment from E&E News. But the points that Sommers outlined last month dovetail with Trump’s “energy dominance” agenda.
“Where is the energy we’re going to need going to come from?” Sommers asked at a panel discussion in Washington. “We need to be focusing on developing new places.”
The energy the country needs to make up for the decline in shale plays should come from cleaner sources of energy such as wind and solar, said Tyson Slocum, director of the energy program at consumer advocacy group Public Citizen. He said Alaska and offshore projects won’t produce enough energy to keep up as current oil developments decline.
“Now would be a good time to start really focusing on transitioning us from fossil fuels,” he said in an interview.
Trump dismisses the idea of climate change and an energy transition. He also scoffs at the idea that oil companies won’t want to drill their way to lower prices.
“I’ll get those guys drilling,” he told supporters in Greenville, North Carolina, in November. “If they drill themselves out of business, I don’t give a damn.”
Reporter Carlos Anchondo contributed.
