As the anniversary of US President Donald Trump’s second inauguration draws closer, the domestic impact of his oil and gas strategy becomes ever clearer. Under his administration, the sector has been shaped by a glut of licences and a glaring absence of tariffs.
On licensing, the Trump administration has implemented reforms to encourage exploration and drive oil and gas production. The strategy has run in parallel with tariff exemptions, which have sought to safeguard the feedstock imports on which most of the Gulf Coast’s refineries rely to produce US petroleum products.
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A year on, production has increased – but the story is not straightforward, with oversupply now chokeholding investment.
Oil and gas production levels were already increasing under the Biden administration. During Biden’s final year in office, crude oil production saw a 1.05% increase year on year, while dry natural gas increased by 0.2% to 37.72 trillion cubic feet (tcf).
Under Trump, crude oil experienced a 5.56% increase between January and October 2025, ramping up from 13.14 million barrels per day (mbbl/d) to 13.87mbbl/d. While the Energy Information Administration has not yet released dry natural gas figures for 2025, it projects that production will increase by 3.9% from 103.07 billion cubic feet per day (bcf/d) in 2024 to 107.1bcf/d (equating to approximately 39.3tcf).
More oil and gas means lower prices and, according to vice-president of policy for the Institute for Energy Research, Kenny Stein, “oil prices now are too low, and general cost inflation too high, to justify a large investment in increased production”.
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By GlobalDataDespite a strong year under Trump, he adds: “I wouldn’t expect production to fall necessarily, but any increase will be limited and gradual, from improved efficiency or technology deployment.”
Whether the new administration has ‘unleashed’ US energy is up for debate. What has materialised is a Trump-driven two-pronged approach: a drive to expand exploration and drilling activities via licensing reform and an effort to buoy midstream and downstream oil and gas operations through tariff exemptions.
Licensing Trump’s ‘unleashing’
“The biggest actual change so far is that leasing on federal lands (onshore and offshore) has the green light again,” says Stein.
“The administration has reversed the Biden Interior Department’s various – arguably illegal – moratoriums and restrictions, allowing leasing and operations to proceed as intended by congressional statute.”
Biden oversaw the 10th National Outer Continental Shelf (OCS) Oil and Gas Leasing Programme, which was finalised in 2023. The five-year lease plan was set to span 2024–29 and limited new oil and gas licences to three – the minimum required by the Inflation Reduction Act and the fewest in history. Under Biden’s plan, the three licences were set for the Gulf of Mexico (GoM) in 2025, 2027 and 2029.
Trump’s election campaign was defined by the phrase ‘drill, baby, drill’, and it didn’t take long for the administration to unpick the previous plan. The One Big Beautiful Bill Act (OBBBA) was signed on 4 July 2025, outlining an offshore lease plan that included a total of 36 oil and gas licences, comprised of 30 auctions in the GoM over the next 15 years and six in Alaska’s Cook Inlet until 2032, with the first sale set for March 2026.
In November 2025, Trump’s Department of the Interior also released a draft of the 11th National OCS Oil and Gas Leasing Programme for the 2026–31 period. It replaces Biden’s “restrictive” 2024–29 version and includes 34 potential offshore lease sales, additional to those in the OBBBA. Of these, six are along the Pacific Coast, seven in the GoM and 21 offshore in Alaska. The draft is due to be implemented by October 2026.
The CEO of the American Petroleum Institute, Mike Sommers, voiced the sector’s enthusiasm in a press call this week: “We finally have new access to the Gulf of America [also known as the GoM] and federal lands.
“We have been incredibly supportive of the President’s regulatory agenda, his agenda towards access to federal lands and federal waters, and tax priorities,” he added later.
Trump has made more than a billion acres of federal lands and waters available to oil and gas companies for drilling, but licensing isn’t the only regulatory reform that has changed the picture.
Immediately after his inauguration, he signed an executive order ending Biden’s pause on granting licences for new liquid natural gas (LNG) export projects to non-Free Trade Agreement countries.
Since then, a series of export-related approvals and authorisation extensions have been approved by the Department of Energy. They include approval for Commonwealth LNG (Louisiana), Port Arthur LNG Phase II (Texas), Venture Global’s CP2 facility (Louisiana), Golden Pass LNG (Texas) and Delfin LNG (Louisiana).
According to Paul Hasselbrinck, an analyst at Offshore Technology’s parent company, GlobalData, the combination of “repealed Biden-era bans on offshore drilling in federal lands, reinstated revoked leases in protected areas in Alaska and lifted LNG export pauses has resulted in a 55% increase of drilling permits in his first year”.
Outside of new licences, the oil and gas sector has welcomed other regulatory shifts under Trump. The Environmental Protection Agency (EPA) has proposed revoking 2015 emissions standards, which required a 32% reduction in emissions from the power sector by 2030 compared to 2005 levels, and included stringent pollution standards for new natural gas-fired power plants.
The EPA has also proposed repealing the 2024 rule for new and existing fossil fuel-fired plants, which requires new baseload natural gas plants to reduce greenhouse gas emissions by 90% by 2032.
Sommers touted the changes as “historic reforms that are going to benefit the American oil and gas industry”, but there is some scepticism. Hasselbrinck warns: “Regulatory changes have been rushed with executive orders and a temporary Republican majority across chambers; the fact that they contrast heavily with the previous administration’s views provides a sense of legal instability which hinders long-term business planning.”
Tariffs and a lack thereof
The second element of Trump’s two-pronged approach is one of absence: no tariffs have been applied to crude oil, natural gas or refined fuel imports.
The reasoning is two-fold: tariffs would impact feedstock prices and therefore profit margins for the US’ 131 operable refineries, while US gasoline and diesel purchasers would also quickly feel the impact of a crude oil import tariff. By protecting the domestic sector and voters’ pockets, the exemption is a two-way win for the Trump administration.
The US is the biggest refiner of petroleum products worldwide and produced around 18.4mbbl/d in 2024. However, production is dependent on imported feedstocks. In 2023, it imported around 8.51mbbl/d of petroleum from 86 countries.
The biggest sources were Canada, Mexico, Saudi Arabia, Iraq and Brazil – countries that have certainly not been exempt from other tariffs under Trump. Of the 8.51mbbl/d imported, 76% was crude oil, which was used on the Gulf Coast, home to the largest concentration of crude oil refineries globally.
“The industry has been successful in convincing the administration to include carveouts or reductions in tariffs for physical oil and gas itself – for example, the Canada tariffs – through active lobbying,” says Stevens.
“However, they have not seen that success regarding tariffs for steel and aluminium, or other inputs that are imported. That dichotomy means that refiners have been spared some of the harm, but domestic exploration and production have been hit with higher costs.”
Indeed, upstream and midstream companies now face inflated steel and aluminium prices due to tariffs. In June 2025, Trump issued Proclamation 10947, increasing the tariff rate for steel and aluminium from 25% to 50%.
Steel, especially for oil country tubular goods (OCTG), is essential for oil and gas infrastructure, used in casing, drill-pipes, gathering lines, transmission lines and LNG tanks, among other uses. It is estimated to comprise around 10% of manufacturing costs in oil and gas, and higher costs mean lower profit margins.
According to EY, steel tariffs will translate into a long-term cost increase of 5.6% for semi-finished steel products in the sector.
Hasselbrinck agrees that steel tariffs are a specific pain point, especially for OCTG, commenting: “The most harmful individual tariff has been on imported steel, which impacts machinery and infrastructure across the supply chain.”
However, Trump’s broader tariff strategy also has ramifications. “Regardless of which specific product it is levied on, tariff and trade uncertainty hurting economic prospects is far more damaging to the industry than any individual cost hike associated to tariff levies,” notes Hasselbrink.
A weapons-down moment: what has changed for the industry?
Production is increasing, but inflated costs are squeezing profit margins, and an overall decline in rig count across both oil and gas operators appears to indicate a US hydrocarbon sector fraught with challenges.
However, the industry sentiment is broadly positive, particularly around the deregulation trend and increase in licences seen under Trump.
“All that negative pressure has completely dispersed,” says Stevens. “ESG [environmental, social and governance] has been abandoned, tech companies want cheap and reliable energy from natural gas and the regulatory sword of Damocles has been removed. The political and investment environment has done a complete 180.”
The administration has spent its first year openly tackling this “regulatory sword”, having declared its intention to “rescind all agency actions identified as unduly burdensome” from Trump’s first day in office.
Outside of oil and gas licensing and tariff exemptions, Trump’s changes include the repealing of environmental protections, which have been largely portrayed as Democrat-placed stumbling blocks. Sommers noted that “Barack Obama had a war on coal. Joe Biden had a war on oil and gas,” adding: “It is time for everyone to put their swords down and work towards comprehensive reform that will be durable no matter the swings in the political cycle.”
Whether the current administration considers this a moment for regulatory olive branches is a different question, but it was certainly viewed as a moment of emancipation for the hydrocarbon sector. In March 2025, EPA administrator Lee Zeldin declared a reconsideration of regulations “throttling” oil and gas, calling it “the greatest day of deregulation our nation has seen”.
Of the 31 regulatory actions put up for review, two have been finalised. One relates to heavy metals contamination in drinking water from coal plants; the other gave an 18-month extension to the oil and gas industry to meet emissions standards for methane and volatile organic compounds.
Sommer commented: “We were appreciative of the delays that EPA announced last year. What we are doing now is working with them on crafting durable rules that we think are common sense and provide the flexibility needed to maintain production levels, while still reducing emissions and incentivising continued innovation in this space.”
