Oil and gas production in the U.S. Eleventh Federal Reserve District, which includes Texas, Louisiana, and New Mexico, decreased slightly in the second quarter of 2025, according to the Dallas Fed Energy Survey. The survey's broadest measure of business activity in the energy sector fell to -8.1, marking the worst contraction since the second quarter of 2020. The oil production index dropped sharply from 5.6 in the first quarter to -8.9 in the second quarter. Nearly half of the surveyed executives expect to drill fewer wells in 2025 than initially planned, with 26% anticipating a significant decrease and 21% a moderate decrease. Furthermore, 46% of respondents forecast their firms’ oil production to decline significantly from June 2025 to June 2026 if West Texas Intermediate (WTI) crude prices remain at $50 per barrel, while another 42% expect a slight decrease. The contraction in oil and gas activity is attributed in part to higher U.S. steel tariffs, which have increased costs and contributed to margin pressures and uncertainty within the sector.