President Donald Trump’s promise to bring oil prices down to $50 a barrel could devastate Texas’ oil and gas economy, according to energy analysts and industry leaders. The pledge, which Trump has suggested could be accomplished by flooding the U.S. market with Venezuelan oil, would harm a state that has benefited from sustained drilling activity and higher prices since 2024. Regional economies like the Permian Basin, which depend heavily on oil and gas tax revenue and employment, stand to lose billions if production declines as predicted.
Texas tax revenues, school districts, and local governments have received billions in oil and gas tax revenue, making the industry essential to the state’s economic stability. A significant price drop could reshape regional employment and public finances in ways that would affect millions of Texans.
The Policy Conflict
Trump has not publicly detailed how he would achieve a $50 per barrel price, but he has suggested that U.S. control of Venezuela’s vast oil reserves could accomplish the goal. That approach would flood the market with additional supply, potentially lowering prices for American consumers at the pump.
Trump’s energy strategy reveals a tension: a commitment to “drill, baby, drill” domestically while also promising lower fuel costs for consumers.
The Economics of a Price Collapse
Operators in Texas need at least $62 per barrel to cover drilling costs and still make a profit, according to Dane Gregoris, managing director of Enverus, an energy analytics firm. Below that price, oil companies make little if any money.
“At $50 a barrel, things look pretty dire, and then at $40, you’re looking at big cuts to capital budgets, likely big declines in crude oil production in the U.S., and a significant amount of sort of cash flow negative producers out there, which usually spells trouble for foreign investors in the space,” Gregoris said.
Oil and gas production in Texas remained relatively flat between December 2024 and October 2025 at 5.8 million barrels per day, according to data cited by the Enverus analyst. Texas has lost 20 drilling rigs since Trump took office, a signal that operators’ appetite for expansion has already declined.
Regional Economic Dependence
Odessa, a city of about 120,000 people in the Permian Basin, shows how central oil and gas are to the regional economy. The industry is the dominant employer in the region.
The Texas oil and gas industry employs approximately 495,000 workers statewide, and the industry has historically generated billions in tax revenue for schools, local governments, and state coffers.
Tom Manskey, director of economic development for Odessa, said low prices posed a risk to the region’s stability. “I would imagine it would have a negative effect on our region with regards to jobs and everything else,” Manskey said. “We’re in a very unpredictable economic time, and I think that’s just adding to it. There’s no predictability right now in the marketplace.”
Ray Perryman, an economist and founder of the Perryman Group, said declining oil activity would ripple through the broader economy. “In an area such as the Permian Basin, reducing activity in the oil and gas industry has substantial ripple effects on housing, retail in other areas,” Perryman said. “Because economic activity leads to tax receipts, an inevitable outcome is lower tax revenue to local entities.”
If oil prices were to drop to $50 per barrel, Perryman said, “the short-term effects are likely to be somewhat positive for many segments of the U.S. economy, but there would clearly be winners and losers.”
Industry Response
Some industry leaders downplayed the threat, pointing to technological advances that allow them to operate profitably even at lower prices.
Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, said horizontal drilling would help operators continue production. “A slight decline in production in 2026 would modestly pressure state and local budgets, but Texas’s robust economy and drilling efficiencies would help to mitigate statewide impacts,” Longanecker said.
Todd Staples, president of the Texas Oil and Gas Association, characterized the current environment as a market adjustment. “The Texas oil and natural gas industry has a long history of delivering essential products while navigating price volatility,” Staples said. “What we’re seeing today reflects market adjustment rather than distress, recognizing that companies are necessarily adapting to current and forecasted market conditions.”
Local Concerns
Renee Earls, president and chief executive of the Odessa Chamber of Commerce, underscored the local economy’s dependence on oil and gas. “We’re all in the oil business, regardless of whether we work at a restaurant, in a chamber, or in a bank,” she said. “We’ve learned to always prefer stability.”
She said she would begin to panic if oil prices dropped to $40 per barrel, a level she described as catastrophic for the region.
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