Oil is trading around $110 per barrel. American shale producers have the capacity to drill more. And yet, according to Dallas Federal Reserve President Lorie Logan, they’re choosing not to. Her message on April 2 was blunt: don’t count on US oil production to ride in and rescue global supply.
The $70 floor that explains everything
Here’s the thing about oil economics that gets lost in the headline price. West Texas Intermediate crude sitting at $110 per barrel sounds like a gold rush for US producers. But the breakeven price for new drilling projects hovers just below $70 per barrel, according to Logan’s remarks. That’s a $40-plus margin on paper.
The Dallas Fed’s Energy Survey from Q1 2026 paints a picture of an industry exercising extreme caution in capital spending. Oil and gas firms are showing mixed production outlooks and a general hesitance to expand output aggressively. They’ve been burned before by boom-bust cycles, and $110 oil driven by geopolitical chaos doesn’t exactly inspire long-term investment confidence.
Geopolitics and the inflation problem
