Economic Motivations Behind the Pursuit of Venezuelan Oil

As the midterm elections approach, Trump seems to be banking on the potential of inexpensive oil to invigorate the U.S. economy. With a keen focus on gas prices and rising unemployment, he may view Venezuelan oil as a remedy for economic challenges. Echoing memories from the oil crises of the 1970s, Trump appears to believe that affordable oil can resolve current economic woes.

Investment Challenges and Political Realities

While the allure of Venezuelan oil might be tempting, acquiring it is fraught with challenges. Current global oil prices are low, rendering the extraction of heavy crude from Venezuela’s Orinoco belt economically unfeasible. Experts suggest that prices need to reach at least $80 per barrel for investment in new Venezuelan oil wells to be justified. As of now, prices linger below that threshold.

Additionally, Venezuela’s crumbling infrastructure and declining production rates have made its oil reserves less viable. In 2022, Venezuela produced approximately 880,000 barrels daily, representing just 1% of global oil production. To attract potential investors, substantial improvements to infrastructure would be required.

The Unlikelihood of Successful Acquisition

Gaining control of Venezuelan oil resources poses significant obstacles. As political analyst Emily Meierding points out, crude oil cannot be easily seized. Concerns over stability and the reliability of contracts with a potential future government further complicate matters. The fate of these investments might hinge on the political landscape in Caracas, raising serious doubts about their sustainability.

The Declining Importance of Foreign Oil

In recent years, the U.S. economy has become increasingly less dependent on foreign oil. Major advancements in energy efficiency, coupled with a surge in domestic oil production, have led to a gradual decline in reliance on overseas resources. Some economists argue that past oil shocks had minimal impact on economic performance, suggesting that the U.S. economy is more resilient and diversified today.

As oil’s role in the energy mix diminishes, the focus shifts away from international oil markets toward sustainable and locally produced energy solutions. The U.S. now produces three times more GDP per unit of energy consumed compared to the turn of the century, highlighting a shift in economic dynamics.

Historical Context and Foreign Policy

The U.S. has a complex history of engaging in foreign affairs to secure access to oil resources, from the CIA-backed coup in Iran in 1953 to military interventions in Iraq. These actions often prioritized immediate access to oil over long-term stability. While the potential for investment in Venezuelan oil exists, historical examples demonstrate that such endeavors seldom yield lasting benefits for foreign companies or local economies.