(The Center Square) – U.S. oil and natural gas firms have a message for President Donald Trump: his energy and tariff policies are creating chaos and his “drill, baby, drill” mantra is “a myth,” according to a new Dallas Fed survey of 130 energy firms in Texas, New Mexico and Louisiana.

Firms weighed in on the impact of Trump administration policies in just the first few months of his second term after rig counts have dropped, layoffs have increased and operating costs continue to go up, The Center Square reported.

The Fed’s first-quarter energy survey measured the condition of energy firms located in its district. Its company outlook index decreased 12 points, “suggesting slight pessimism among firms;” its outlook uncertainty index increased by 21 points.

Of the 130 energy firms surveyed, 88 are in exploration and production (E&P); 42 are in oilfield services. Their average operational cost per barrel is $45, and firms “need $65 per barrel on average to profitably drill,” the Fed notes. The WTI was at $63 a barrel as of Tuesday.

The amount of debt and investment needed to explore and drill new wells isn’t feasible with oil prices dropping and overall economic uncertainty, industry executives argue.

Costs have increased across the board, firms said, with the most being legal and administrative in order to comply with a plethora of regulations, energy firms said. Although the Trump administration is reducing federal regulatory burdens, 40% of companies surveyed said they didn’t expect their regulatory compliance costs to go down; 21% said they expect them to go up.

“The key word to describe 2025 so far is ‘uncertainty’ and as a public company, our investors hate uncertainty,” one E&P executive said, according to the survey. “This has led to a marked increase in the implied cost of capital of our business, with public energy stocks down significantly more than oil prices over the last two months. This uncertainty is being caused by the conflicting messages coming from the new administration.

“There cannot be ‘U.S. energy dominance’ and $50 per barrel oil; those two statements are contradictory. At $50-per-barrel oil, we will see U.S. oil production start to decline immediately and likely significantly (1 million barrels per day plus within a couple quarters). This is not ‘energy dominance.’ The U.S. oil cost curve is in a different place than it was five years ago; $70 per barrel is the new $50 per barrel.”

Another said, “First, trade and tariff uncertainty are making planning difficult. Second, I urge the administration to engage with U.S. steel executives to boost domestic production and introduce new steel specs. This will help lower domestic steel prices, which have risen over 30 percent in one month in anticipation of tariffs.”

“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,” another said.

“The disconnection of oil and natural gas markets, specifically commodity pricing, seems to be causing a feast-or-famine effect on the industry,” another said. “Companies with natural-gas-weighted assets will spend more money in 2025 developing their assets, but oil-weighted companies will decrease capital spending with the current pressure on oil pricing for 2025.”

Still another said, “The administration’s tariffs immediately increased the cost of our casing and tubing by 25 percent even though inventory costs our pipe brokers less. U.S. tubular manufacturers immediately raised their prices to reflect the anticipated tariffs on steel. 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.”

One Texas-based E&P firm said, “for the average onshore upstream operator, the current administration versus the previous administration regulatory regime shows no real change at all. We still get our permits from the Railroad Commission in Texas, for example, not the Environmental Protection Agency. The federal regulatory regime matters if you are operating in the Gulf of Mexico or Alaska but not for the Permian, Eagle Ford, Bakken, Utica, etc.”

Others pointed out that the Trump administration asking OPEC+ countries to increase crude production “hurts domestic operators.”

Another said, “The rig count is flat and scrap prices are up. Time to scrap more rigs; there are lots of rigs that will never go back to work.”

“I have never felt more uncertainty about our business in my entire 40-plus-year career,” another said.

(The Center Square) – A key pledge of President Donald Trump’s energy policy is to “unleash American energy,” make the U.S. energy industry dominant, and “drill, baby, drill.”

His Energy Secretary, Chris Wright, the former CEO of Denver-based Liberty Energy, also vowed that Trump’s energy policies would create a “golden age” for the U.S. oil and natural gas industry.

Within the first few months of Trump’s new administration, the opposite has been true, with layoffs increasing, rig counts dropping, and industry executives expressing alarm.

After Trump was reelected, “the initial mood in the industry was euphoric” because the industry believed the administration was “pro-energy,” Odessa-based Latigo Petroleum president Kirk Edwards said. “But within the first few months, a different set of challenges emerged. Tariffs have driven up the cost of drilling, squeezing margins just as operators look to expand.”

The Trump administration pushing OPEC to increase production in an already oversupplied global market contributed to oil prices plummeting. “This sharp price decline has thrown U.S. producers into limbo,” Edwards said. Trump’s mantra, “Drill, baby, drill,” turned into “wait, baby, wait,” he said. As a result, the industry isn’t adding rigs to drill when “price signals are so unclear,” The Center Square reported.

The rig count has dropped under the Trump administration, with the biggest losses reported in Texas, the oil and natural gas capital of the U.S. As of March 28, there were 290 rigs in Texas, down from 376 in March 2024, according to newly released Baker Hughes data.

“The U.S. shale industry faces significant challenges as production issues and economic pressures rise,” Linhua Guan, CEO of Houston-based Surge Energy, said in a social media post. He also published the results of a poll showing that the majority surveyed believed the U.S. crude oil production would plateau this decade.

Pioneer Natural Resources Founder Scott Sheffield warned that Trump’s “drill, baby, drill” mantra “might not happen.” Sheffield set a grim picture for the industry in Houston, saying “You’ve really got to hunker down. You may have to lay off some people. You’ve got to focus on your best prospects. We’ll see what happens over the next two or three years,” Bloomberg News reported.

Since then, oil prices keep dropping. The West Texas Intermediate, the benchmark for U.S. crude, was at $63.92 a barrel on Tuesday, below the $65 threshold companies need to break even. That’s down from the $80 a barrel the WTI was posting in early January.

The Texas oil and natural gas industry in the last two years reported record production and for many months was adding jobs and leading the U.S. in job creation, The Center Square reported. In March, it reported a loss of 700 jobs in the upstream sector – the sector that drills primarily in the oil rich Permian Basin, The Center Square reported.

Also last month, BP announced it was shedding 7,700 jobs globally and shifting roughly 1,100 U.S. based jobs to Hungary, India and Malaysia, Pipeline & Gas Journal reported. BP currently employs roughly 4,000 people in Houston, the oil and natural gas capital of Texas and the U.S. where BP’s U.S. headquarters is located.

In February, Chevron announced it was laying off up to 20% of its global workforce by the end of 2026. In January, Houston-based APA, the parent company of Apache Corporation, announced it was laying off nearly 300 employees globally; by February, it had reduced its corporate office by one-third, The Houston Chronicle reported. More layoffs are expected in Texas, industry executives have told The Center Square.

Uncertainty in the industry continued after Liberty Energy published its first quarterly earnings report showing a profit of $165 million, the lowest since the first quarter of 2022. “Net income (after taxes) totaled $20 million for the first quarter of 2025 compared to $82 million in the first quarter of 2024 and $52 million in the fourth quarter of 2024,” it said.

Its new CEO Ron Guzek said, “In recent months, tariff announcements and a more aggressive OPEC+ production strategy have sent ripples across the energy sector.” He told investors and media on a call, “As we look forward, of course, there are some storm clouds on the horizon. We don’t know if that storm is going to roll in here or not.”

“As global oil markets contend with tariff impacts, geopolitical tensions, and oil supply concerns, North American producers are evaluating a range of macroeconomic scenarios,” the company’s outlook states. “The recent pause on tariffs has momentarily eased pressure on the global economy, and in turn, global oil demand concerns. However, markets remain focused on supply side dynamics, including the evolving OPEC+ production strategy and potential constraints on Iranian, Russian, and Venezuelan oil exports.”

Since Trump’s been in office, Liberty’s stock has plummeted by 40%.

U.S. oil and gas executives are overall expressing pessimism, according to a Dallas Fed survey. The company outlook index decreased by 12 points; the outlook uncertainty index increased by 21 points.