As Donald Trump, the self-anointed acting president of Venezuela and the United States, eyes the country’s vast oil reserves, industry experts caution that the economic case for investing in Venezuelan crude is weak. Despite Trump’s obsession with low gas prices and his belief that cheap oil can cure all economic ills, the reality is that the world is awash in oil, much of it from US shale production.
The price of oil has remained low, hovering between $58.7 and $62.3 per barrel over the past month, well below the $80 per barrel threshold needed to justify new investment in Venezuela’s decrepit oil infrastructure. Last year, the country produced just 880,000 barrels per day, a mere 1% of global oil production and only 4.3% of what the US pumped.
Even if Trump could secure access to Venezuela’s oil, experts warn that the risks would outweigh the potential rewards. “Crude oil is not a quickly or easily lootable resource,” notes Emily Meierding of the Institute for Regional and International Security. Any contracts signed with Trump or his puppet regime in Caracas would likely be abrogated by a future government, and the facilities themselves could be targeted for attack.
Moreover, the US economy has become less reliant on foreign oil in recent years, thanks to gains in energy efficiency and a shift towards a service-based economy. The country now produces about three times as much GDP per unit of energy consumed as it did at the turn of the century, reducing the impact of oil price shocks.
While the US has a history of meddling in other countries’ affairs to secure oil access, the economic case for doing so in Venezuela appears weak. As one ExxonMobil executive told Trump, the country is currently “uninvestable.” For US companies, it may be safer, easier, and cheaper to procure the oil the economy needs from domestic sources.
