When a sharply lower price per gallon pops up at local gasoline pumps, it can induce a momentary cognitive dissonance. I mean, where is inflation? During the first 10 months of President Donald Trump’s second term, the price of oil has slid markedly. It is now, in mid-October, around $57 per barrel, down from about $70 in late July — a drop of roughly 20 percent in three months. It is the lowest in almost five years: that is, since Trump ended his first term and Biden took over. What lies behind this decline? Has the administration’s “Drill, baby, drill” approach resupplied starved markets — or do global forces get some of the credit?
From day one, the second Trump administration moved to reverse climate-oriented policies and promote fossil-fuel production. On January 20, 2025, Trump signed executive orders lifting restrictions on oil and gas development in Alaska’s Arctic National Wildlife Refuge and expediting liquefied natural gas (LNG) infrastructure approvals. A companion order directed agencies to halt or review clean-energy initiatives and accelerate oil-and-gas permitting. Observers called the early rollbacks as sweeping as those of his first term, extending to federal-land leasing, emissions limits, and pipeline construction. Polling by Pew Research Center showed a partisan divide: 57 percent of Republicans favored expanded drilling on federal lands, compared with 9 percent of Democrats.
By contrast, the Biden administration (2021–2024) emphasized carbon reduction and tighter regulation of fossil-fuel production while subsidizing renewable energy and electric vehicles. Biden did not halt all drilling — the momentum of US output remained high — but his regulatory regime was more restrictive. The return to Trump represented a decisive pivot back to fossil-fuel liberalization. Experts caution that US policy alone cannot control prices in a global market. One Brookings Institution analyst stated the obvious: the United States is not the world. “Oil is priced internationally … US actions alone will not have such a large impact.”
Has the “Drill, baby, drill” attitude itself caused the price slide? Not yet, at least. The expected surge in rigs has not had time to materialize; Inside Climate News reported in July that “Trump promised a drilling boom. The new rigs haven’t …” Actual infrastructure responses always take time. And undeniably, oil prices reflect a global market. The International Energy Agency (IEA) estimates a worldwide surplus of some two million barrels per day so far in 2025, potentially rising to four million next year. The US Energy Information Administration (EIA) projects Brent crude averaging about $62 a barrel in late 2025 and $52 in 2026 as inventories build. Reuters summed it up on October 17: “Oil prices set for weekly loss … after the IEA forecast a growing glut and US–China trade tensions.”
But one pundit’s “glut” is another man’s return to freer-market production that brings down prices for consumers. When scarcity is politically engineered, abundance looks like loss of control. The term “glut” implies waste, but it signifies that producers are finally freer to meet demand without artificial ceilings. In industry terms, a “glut” means daily production exceeding demand by roughly one to two million barrels — a surplus sufficient to swell inventories and push futures into contango, but hardly a collapse. It is the market’s way of re-establishing balance once production is allowed to breathe again.
The international context underscores the point. OPEC and its allies (OPEC+) are raising output by roughly 1.4 million barrels per day this year. Exports from the Middle East reached two-and-a-half-year highs in September. Russia, despite sanctions and infrastructure risks, continues significant exports, while Venezuela, Libya, and Nigeria have added supply. China’s crude imports fell to their lowest level since January, reflecting weaker industrial demand and a pause in stockpiling. Altogether, rising supply and softening demand have pushed futures markets into contango — a classic signal of near-term oversupply.
For drivers, homeowners, and businesses dependent upon power supplies, cheaper oil is welcome; lower gasoline and heating costs boost disposable income and ease upward pressure on prices caused by huge Fed money supply increases. This is how markets are supposed to work: as competition expands, prices fall to the benefit of every consumer. What some pundits call “market pain” is simply the end of protected pricing. Producers don’t welcome lower prices, but for how long have we read about galloping profits of “Big Oil” as a side effect of the war on fossil fuels? The Wall Street Journal recently warned that “lower oil prices are severely affecting the domestic oil industry, which is already struggling with job losses and shrinking profits.” Even so, ExxonMobil, Chevron, and Shell are reporting profit margins still above their 2015–2019 averages — evidence of normalization, not collapse. Goldman Sachs expects prices to decline through 2026 because of excess supply and weak demand. Market analysts see the drop as signaling a broader economic slowdown linked to US–China trade tensions. Gulf stock markets have also softened on the weak oil price outlook.
And that amounts to what? For the four Biden years, competition in the oil industry was suppressed by attacks on fracking, restrictions on drilling permits, and the blocking of major supply pipelines — not to mention the moral denunciation of fossil fuels as planetary doom. When Washington throttled new leases and raised compliance costs, small independents were forced out. What survived were the giants, protected by scale and legal muscle — and applauded as “responsible corporate citizens.” Now, in America at least, competition is unleashed again, price competition is back, and “Big Oil” profits are reverting to market norms. As Shale Magazine editor Ronald Rapier said, “It’s an irony that when Democrats are in there and they’re putting in policies to shift away from oil and gas, which causes the price to go up, that is more profitable for the oil and gas industry.” Ironic that suppressing supply drives up prices so existing companies profit?
Environmentalist voices, unsurprisingly, are raising alarms of a different kind. PBS reported that market forces (rising prices) could undercut the administration’s plans to increase the use of fossil fuels, but Trump plans to roll back climate regulations, end clean-energy incentives, and promote fossil fuels. Climate-policy groups condemn the agenda as “a dream for polluters and a nightmare for America.” Cheaper fuel may slow investment in renewables and electric vehicles, reducing momentum toward emissions targets.
And that is where we are just 10 months into Trump’s second term. His policies reinforce a pro-fossil-fuel trend that is increasing US supply and could continue over time. It is early days, so the administration’s commitment is consistent with lower prices, but not yet the dominant cause. There is speculation that a $60 per barrel price, slightly higher than now, might represent current market equilibrium. Should oil fall below $60 for long, some producers may curtail output — the CEO of TotalEnergies has already warned that non-OPEC supply would decline at that threshold.
Energy abundance, however, is not an anomaly. It happens when government stops treating energy as a sin. Trump’s policy did not “distort” the market; it let the market remember what freedom feels like. Consumers enjoy cheaper fuel, producers face genuine competition (but fewer accusations of “obscene profits”), and environmentalists, as ever, lament lost momentum.
It must be added that if this is good news, it is not all good. Free market policies are doing their job, but the Trump tariffs are not free market and are a headwind. The Federal Reserve Bank of Dallas’s quarterly survey of oil and gas producers reported that one-third of respondents thought that higher tariffs on steel imports might result in drilling fewer wells. And three-fourth said tariffs raised the cost of drilling and completing new wells.
Mr. Trump is not notable for articulating consistent principles and clear policies. As long as that is the case, results will be mixed and the case for free-market measures will be vulnerable to a confusion of the benefits of partial economic freedom with the damage from continued partial controls. Such confusion always advantages the side with the weakest arguments.
