U.S. News: Fracking Capital Feels Pinch From Cheap Oil

“MIDLAND, Texas -- For most Americans, cheap oil is good news. In Midland, it's a problem.

 

Oil prices have mostly slumped since last spring, and the U.S. intervention in oil-rich Venezuela is stoking President Trump's desire to push prices down further. This raises a new risk for Midland, where restaurants are already less crowded, barbers are idling around waiting for customers and a host of businesses linked to the oil field are feeling squeezed. On the local Facebook Marketplace, shiny Ford F-150 pickup trucks are listed for sale at bargain prices.

 

"If you want a new jet ski, right now is the best time to buy," said Taylor Sell, chief executive at Element Petroleum, a small oil producer.

 

Here in the heart of the Permian Basin, America's fracking capital, economic fortunes rise and fall with energy prices. A big electronic billboard in downtown Midland shows current market rates for oil and gas and the local oil-rig count, along with motivational slogans like "broken crayons still color."

 

Lately the numbers haven't been good. Oil recently traded below $60 a barrel, a price where many operators can just barely continue to pump profitably, but starting new wells usually makes little financial sense.

 

Meantime, tariffs have pushed up the cost of materials like chemicals and steel tubes, Midland oil executives say.

 

As new wells get delayed, workers at oil-services firms are laid off or see their hours cut. "We're definitely not drilling right now," Sell said.

 

Kyle Patterson, engineering manager at local drilling-fluid company Buckeye, said the company had to lay off around 10% of its staff over the past year to cut costs. Fewer new rigs means less demand for Buckeye's product.

 

"You can't just sit around and wait for the market to come back," Patterson said. He wouldn't be surprised if his own pay is cut soon and is cutting back on travel and restaurant meals.

 

The number of operating rigs in the Permian Basin is down 14% over the past year, according to analytics company Enverus. Cash-strapped workers spend less at local businesses. Occupancy at area hotels was down 5.6% between November 2024 and November 2025, according to data company CoStar.

 

A White House bent on keeping oil cheap has raised worries in Midland that this downturn won't be brief. Ben Shepperd, president of the trade group Permian Basin Petroleum Association, fears that a prolonged price slump will force more local wells to close.

 

"It has really cast a shadow over the Permian," Shepperd said.

 

Bubba Dobson, a Midland-based business-development representative for a company that leases out mud motors to drillers and oil-well operators, saw his salary cut by around 5% last year. Less demand from drillers also means he takes home smaller bonus payments. He has seen competitors go out of business.

 

Dobson's ideal oil price is $80 a barrel -- a figure he believes keeps gasoline prices muted for American consumers, but also keeps the local oil industry humming. He said he understands the rationale for ramping up production of Venezuelan oil but doesn't like the idea of relying on imports.

 

"We are on a gold mine; we can produce enough oil to supply ourselves," he said.

 

Midland, nicknamed the Tall City for the downtown high-rise office buildings that are visible for miles on the dry, flat landscape, was a tiny community before the Permian Basin oil discovery more than a century ago. Fracking advances gave Midland a fresh growth spurt, and the population has more than doubled since 1980 to about 143,700.

 

About a third of local workers are employed in mining and construction, a category that includes oil, and many more jobs indirectly depend on the money spouting out of oil wells.

 

The area has country clubs and Mercedes-Benz and BMW dealerships. Although many houses are modest bungalows, high-end homes can top $3 million. Private jets are lined up on the tarmac at the city's main airport.

 

Oil prices have cratered during prior recessions and supply gluts. And when prices do slide, it can take a while for a decline to lead to less demand for workers and equipment. Pat Dennis, a salesman at a local shop that rents out tools used on oil wells, said his income hasn't fallen thus far, and that he is happy to be paying less at the pump.

 

"It'll be a year until we really start feeling the pain," he said.

 

Paul Kenworthy, an independent oil producer, said he has had to pause some smaller projects due to low oil prices. Tariffs have also boosted costs. At the same time, the 77-year-old has lived through many downturns and said he isn't too worried about this one.

 

"This is a boom-and-bust business," Kenworthy said.

 

A few years ago, when oil prices were higher, cars lined up outside the Kwik Kash check-cashing store in Odessa, Texas. Oil workers and truck drivers, sometimes fresh from the field and covered in dirt, handed paychecks over $4,000 or $5,000 through the window, bantering with the cashiers and often tipping generously, said store manager Ruby Ramirez.

 

Now the checks are often much smaller; fewer customers come in, she said. She has cut her staff's hours and said her tips and bonus pay are down. Her father, who drives trucks for oil companies, is also getting less work.

 

"It's an oil-field town," Ramirez said, but it hasn't felt that way lately. "The oil field's not the oil field anymore."” [1]

 

Trump needs to lower oil price in order to cover the effect of his tariffs needed for rebuilding industry. If Venezuelans later adjusts and nationalize their oil again, that the risk he is ready to take for his higher goal.

 

Overview of Current Policy and Market Conditions (January 2026)

 

    Current Oil Prices: Oil prices are currently relatively low, with WTI crude hovering around $61 per barrel. This is a significant decrease from prior years and is generally seen as a positive for consumers through lower gas prices (around $2.81/gallon).

    Tariffs and the Economy: President Trump has enacted widespread tariffs as part of an "America First" agenda to reindustrialize the U.S. economy. These tariffs, however, have contributed to a trade war and disrupted the global economy, causing volatility in the market that could end up increasing prices.

    Venezuela Intervention: The administration's actions have included a military operation to capture the former Venezuelan leader and efforts to bring the U.S. into control of Venezuelan oil assets. President Trump has publicly urged American oil giants to invest an estimated $100 billion to rebuild Venezuela's oil infrastructure, believing that a reliable, cheap, and nearby supply of heavy crude will keep global oil prices down.

 

Risks and Considerations

The above statement touches on several key risks and potential outcomes identified by experts:

 

    Investment Hurdles: Oil companies have been largely silent on Trump's requests for investment. Industry experts cite significant hurdles, including the political instability in Venezuela, a history of state asset seizures, ongoing U.S. sanctions, and current low oil prices which make large-scale investments only marginally profitable.

    Nationalization Risk: The risk of a future Venezuelan government adjusting its policies and potentially re-nationalizing the oil industry is a major consideration for potential investors. The current U.S. control is widely viewed as a short-term strategy by analysts.

    Contradictory Goals: The policy of encouraging U.S. oil companies to boost production to lower prices may seem counterintuitive, as low prices also reduce the profitability and incentive for those same companies to make massive investments.

 

In essence, the statement accurately identifies the core strategic tension: the administration is willing to navigate the substantial political and investment risks in Venezuela to secure lower oil prices, which it views as crucial to offsetting the economic impact of its industrial tariffs and fulfilling its campaign promises.

 

1. U.S. News: Fracking Capital Feels Pinch From Cheap Oil. Putzier, Konrad.  Wall Street Journal, Eastern edition; New York, N.Y.. 14 Jan 2026: A3.