Donald Trump has asked for at least $100bn (£75bn) in oil industry spending for Venezuela, but received a lukewarm response at the White House as one executive warned the South American country was currently “uninvestable”.
Bosses of the biggest US oil firms who attended the meeting acknowledged that Venezuela, sitting on vast energy reserves, represented an enticing opportunity.
But they said significant changes would be needed to make the region an attractive investment. No major financial commitments were immediately forthcoming.
Sure, invest $100bn into an unstable country chasing a dying technology at the behest of a corrupt regime. Even for oil companies, Venezuela is too hot to touch.
It goes beyond that. Venezuela’s oil is heavy crude(if I understood correctly) which is difficult to process and requires specialized refineries in which US oil companies have not invested in.
EDIT: See comments below for corrections and more context.
It’s largely the same as Canadian and Mexican oil, so the infrastructure is very much in place.
It gives Trump an opening to pressure/annex Canada and Mexico, if Venezuela can make up the difference (which they can’t, yet).
It’s true that the infrastructure is already in place but it is important to understand that it is not simple infrastructure, and with a few exceptions, it is already pretty much fully utilized by Canadian and Mexican heavy crude/bitumen so it’s not like they can just double their capacity and start processing Venezuela too. You’re right about giving an opening to pressure Canada/Mexico though.
But it’s questionable if there’s really much upside for the US on the financial side. The opportunity to pressure is definitely there, but more pressure isn’t going to get blood out of a stone. Venezuelan oil will still have costs associated with it, and Canadian and Mexican oil is already really cheap.
The oil itself may be essentially free the way they’re stealing it with military force, but It’s not going to be cheap to build up Venezuela’s production infrastructure and it’s not going to be cheap to transport the oil stateside, and both Mexico and Canada already have all that infrastructure in place too, and already give a huge discount to the US since they have nowhere else to affordably sell or refine their oil as they have effectively no indigenous refining capacity for heavy crude and few other export options. During a few of the oil price plummets around Covid, Canadian oil (Western Canadian Select) was actually selling for negative prices, Canada was paying the US to take it off their hands and refine it for them. With global oil prices already trending relatively low, it’s going to be hard for oil from Venezuela to realistically compete with situations like that.
The most believable explanation that I’ve heard is that this is not really about directly stealing Venezuela’s oil reserves as much as it is about denying it to Russia and China, and maybe securing them in case of some future conflict. And that, I think, makes an awful lot of sense geopolitically as distasteful as I personally find the whole affair.
A few months ago Trumpist billionaire Paul Singer bought Citgo, the former U.S.-based arm of Venezuela’s state-run oil company. Citgo owns three Gulf Coast refineries custom-built to process Venezuelan crude, refineries that have suffered from the U.S. embargo on imports of that crude. If Trump lifts that embargo, Singer will receive a huge windfall. But this windfall will have nothing to do with reviving Venezuelan production.
https://paulkrugman.substack.com/p/the-emperors-new-oil-wealth
Top notch information. Thanks.
While I’m not saying our oil dependency is good, calling it a dying technology is a bit silly. Even electric cars have lots of oil in them, nevermind the phone this is being typed from or my carpets or any other number of daily items. I do wonder if some of the unrest around the world these days is partially out of a fear that theres only so much oil…
An article i read states that with China and India fully investing into EV technologies, we could see oil demand peak in 2030 and:
“The tragedy is that we’re fighting over barrels that look huge on spreadsheets but shrink rapidly when confronted with physics, economics and time,” said Guy Prince, the head of energy supply research at the thinktank.
While the US is a net exporter of oil too.
So basically, it looks like he committed an international crime for oil and then won’t even get the oil. No one should be surprised, I guess. Incompetence is the only constant.
This actually sounds more like they want American troops to turn Venezuela into not-Venezuela… THEN they would feel safe investing.
Trump puts troops in Venezuela.
Oil execs: ya know, it’s mighty difficult to ensure security using only boats, it’d be better if we were in control all the way from the US via land.
The oil execs are saying it’s “uninvestable” precisely because they know how incompetent Trump is.
“Who knew oil could be so complicated?!” - Orange Pirate
Orange Pedo-pirate
Bailout time… Trump will give them the money to invest and make them whole from previous losses
You know damn well big oil put him up to this.
It’s smoke and mirrors
What a fucking doofus Trump is. He couldn’t consider the cost of his actions - and the likely fallout of the same - if his life depended on it.
Cheap fuel for his fanatics wanting the “good old days”.
Whaaaaaaaat? Dragging the dirtiest type of oil out of the ground from a country still resisting invasion isn’t going to be cost effective?
Who knew the guy who bankrupted a casino despite his daddy giving him millions to run it was bad at business?
Yeah, this is why every article that mentions Venezuelas huge oil reserves needs to also mention it is the costliest/ lowest margin oil too. Not all oil reserves are the same, the Saudis being able to pull a barrel out for $15 and sell it for $80 is a way different position then Venezuela pulling a barrel out for $60 and selling it for $70.
It is probably just part of the media manufacturing consent for regime change: “look how resource rich Venezuela is and how poor the people are, it must be because the evil Maduro regime” completely ignoring sanctions. Yeah mismanagement is part of the reason Venezuela is doing poorly but even if they were run perfectly with no corruption they still wouldn’t be living like the Saudis.
Yep. Canada’s tar sands are similar. Low grade tar that can be sold for cheap or upgraded for profit. Either way though even without counting labour standards and wages it costs twice as much to pull it out of the ground and we’ll sell it for half as much
When you account for inflation, oil prices today are in line with oil prices in the early 2000s. The price is too low, and the risk is too high for massive infrastructure spending that would extract more oil from Venezuela to be worth it.
Possibly, green energy technologies are now on a trajectory to overtake fossil fuels altogether - and they are already a factor in driving the price of fossil fuels (and therefore the profitability of many wells and mines) down substantially. If that happens, the long term value of Venezuela’s oil reserves, without suitable infrastructure already built for extraction, could be close to zero.
In line with small government ideals, the best thing to do is let companies decide whether and how much to invest, but that won’t be a headline worth showing off. So Trump is trying to make $100B happen, and believes that that (alone) will restore the Venezuelan economy to the way it was.
It would be very funny and well deserved if they invested on his pressure and in a few years Venezuela just nationalises everything again.
Why would they? It’s a win-win. They either get significant tax payer money invested on their behalf, or the oil stays off market keeping their prices high.
Prices aren’t even that high, crude oil’s price has been on a steady downward March since the high in 2022
This is exactly it, it’s a shakedown and Trump and the party of fiscal responsibility will see to it that yet more corporations get hundreds of billions in government largess. But boy, they sure extracted that 1 bil from PBS, so I guess they’re on point.
This podcast episode explains very well Exxon’s logic: https://pca.st/episode/d7084179-677a-4c82-ac90-c53cf28110c4
I never thought I would be on an oil company’s side in a discussion in my life.
Here’s the podcast episode description:
When people think of oil rich nations their mind generally goes to Saudi Arabia, Iraq and the US.
But according to international statistics, the country with the largest oil reserves is Venezuela, with 300 billion barrels worth.
At their peak they produced over 3.5 million barrels of the stuff per day. However, due to lack of investment, sanctions and mismanagement that peak is long gone.
Following their military intervention, the US administration claims they can get Venezuela’s oil production up and running at full capacity within 18 months.
But can they, and why is it that estimates for other countries oil reserves have fluctuated but Venezuela’s has stayed at 300 billion barrels for over two decades?
Companies have usually avoided morally dubious actions in worlds spotlight, because it deters investors.
Not sure if anyone wants to touch Trumps fresh smelly turd… at least directly and visibly.
Trump uses ‘Art of the deal’.
It’s not very effective.
Turns out he never read it.
That just about sums up this administration, doesn’t it?
Pedopresident needs a diversion, invades a country and murders some civilians, then needs to beg oil execs who never asked nor wanted any of this and now have to deal with his shit
You’d almost start feeling bad for the oil execs. Almost, but not.
I really think this all comes down to a belief that Trump and many Americans hold, that oil is irreplaceable. They have convinced themselves, or have been convinced by others, that civilizations can’t exist without oil, and fossil fuels more broadly. Because of this belief, they’re betting hard on oil and gas. They want to take control of as much of the world’s remaining oil reserves as possible, both to secure oil for ourselves but also to restrict access to adversaries, like China.
But this belief is wrong. Civilizations can exist without fossil fuels, or at least with very minimal fossil fuel use, especially for energy. Fossil fuels are very inefficient and nonrenewable, in addition to being highly polluting. Renewables, like solar and wind, are much more efficient, especially for electricity generation. To generate electricity with fossil fuels, you have to extract the material from the ground, refine it, transport it, then burn it to boil water to generate steam to turn a turbine to generate the electricity. There are a lot of steps there, and a lot of the energy is lost in the process. With solar and wind, electricity is generated at the source. It’s true that solar panels and wind turbines are not very efficient at turning the wind and sunlight into electricity, but once the electricity is generated, all you have to do is transmit it to where it is either stored or used. Some energy is lost in transmission, but that’s true of electricity generated from fossil fuels, too. Renewables are simply more efficient. And, as the name implies, they are renewable. The sun will continue to shine and the wind will continue to blow for a very long time.
So as the world wakes up this realization, the world will continue to transition away from fossil fuels and toward renewables. That will reduce the demand for fossil fuels. The oil companies know this, that’s why they’re not in any great hurry to go and spend billions of dollars to significantly increase oil production. If they dramatically increase oil production, but the overall demand for oil doesn’t also increase significantly, the price for their product will fall. They don’t want to sell their product for less money, because that will reduce their profits. Lowering the price of oil sounds great to consumers of the product, who want lower gas and diesel prices, but the companies selling it don’t want that. Companies want to sell their product for the highest price possible, so they can maximize their profit.
The US is betting on a fossil fuel future, but we’re going to lose that bet. We’ve convinced ourselves, or have been convinced, that oil especially is irreplaceable and that renewables/electrification are a scam. We’re wrong. An electrified world powered primarily by renewables is the future. The longer we continue down this misguided path, the further behind the rest of the world we will fall.
