A report from the Federal Reserve Bank of Dallas has revealed that there was a slight contraction in oil and gas activity in New Mexico, Texas, and Louisiana as companies reacted to an increase in steel tariffs. The Dallas Fed survey found that the current administration’s tariff war with China and several other nations is already having a tangible effect on America’s oil and gas industry.
This fall in activity comes after President Donald Trump doubled import tariffs on aluminum and steel from 25% to 50% early last month, making it more expensive for companies to import steel and aluminum into the country. With 50% of all the aluminum and a quarter of the steel used in the country being imported, the Trump administration’s import tariffs have had a sweeping effect across American industry.
These tariffs have injected massive volatility into various industries, and investors spent the second quarter of the year reacting to the volatility. According to the Dallas Fed survey, a reduction in U.S. crude futures corresponded to a slight reduction in gas and oil production in Q2 2025. Prices dropped to a four-year low in May ($57.13 per barrel) before reaching $75.14 on June 18, LSEG data shows.
Nearly half of the executives polled in the Fed Dallas survey expected to drill fewer wells than they had anticipated at the start of the year. 25% of the executives expected a significant reduction in oil well drilling in 2025. Either way, industry executives generally expect the oil and gas sector to drill fewer wells in 2025.
The survey also found that 27% of companies in the sector believed the jump in steel import tariffs would cause a slight reduction in well drilling, most likely to balance out the financial toll of the higher tariffs. One executive said Washington DC’s policies and rhetoric have had an incredibly damaging effect on the country’s exploration and production firms.
Although the Trump administration promised to deliver a more productive environment, its policies seem to be benefiting the Organization of the Petroleum Exporting Countries (OPEC) at the expense of America’s exploration and production industry. Another executive noted that President Trump’s infamous “Liberation Day” and the tariff-related chaos that ensued afterward have caused significant harm to America’s local energy industry.
If these tariffs remain in place, they could further dampen drilling activity and raise costs for domestic producers. Without policy revisions or support, the U.S. oil and gas sector may struggle to remain competitive, especially as global markets shift and production strategies evolve.
For U.S. energy firms like GEMXX Corp. (OTC: GEMZ) with a focus on exploring for oil and gas resources in Latin America, the option available now is to source the imports they need directly into the Latin American countries where they have operations since costs would become inflated if those inputs go through the U.S.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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