Texas Oil and Gas Outlook Turns Pessimistic Amid Rising Costs

Despite a recent uptick in oil prices, Texas oil and gas firms are expressing a pessimistic outlook for the year ahead, according to the latest Dallas Federal Energy survey. The report highlights declining production, rising costs, and increased uncertainty in the energy sector.

Kunal Patel of the Dallas Fed noted that typically optimistic industry executives are now concerned about commodity prices, global instability, and policy uncertainty. One major issue is relatively weak oil prices amid increased supply from OPEC+, coupled with the added burden of trade tariffs.

“Tariffs raise costs to the oil and gas industry,” said Karr Ingham of the Texas Alliance of Energy Producers. “And that’s happening in a year when the price of the commodity they sell is lower than last year.”

Dan Pickering of Pickering Energy Partners noted that firms have begun cost-cutting measures, including layoffs, and may continue to reduce activity and consolidate to improve efficiency and scale.

Market expectations are also subdued. On average, survey respondents expect WTI crude to finish 2025 at $63 per barrel, with long-term expectations rising modestly to $77 by 2030. For Henry Hub natural gas, the year-end forecast stands at $3.30 per MMBtu, rising to $4.50 over five years.

Still, Pickering emphasized the strength of Texas’ oil production, especially in the Permian Basin, which produces more oil than most countries. Pickering stated, “Texas is blessed and will continue to be.”