When Trump launched his illegal attack on Venezuela, he made his primary reason perfectly clear: he wants to control Venezuela’s oil reserves. Typically imperialist warmongers are savvy enough to provide a fig leaf of justification for their actions, but not Trump. He always delights in crude displays of dominance.
This is shaping up to be a reckless and unjust power grab that runs roughshod over human rights, the sovereignty of the Venezuelan people, and international law.
Curiously enough, the oil industry itself is divided and ambivalent about Trump’s plans. Trump is happy to unleash “gunboat diplomacy” to impose his will on other nations, but his trademark chaos and recklessness is also undermining the stability that the oil industry wants. While we still don’t know how this misadventure will play out, it is increasingly likely that Trump will need to spend U.S. taxpayer money to get oil industry players aligned to carry out his vision.
Fundamental Contradiction
There is a contradiction at the heart of the alliance between Trump and the oil industry. In 2024, Trump corruptly demanded $1 billion from the oil industry in exchange for rolling back environmental protections. But the dirty little secret is that the oil industry is not necessarily on board with every possible way to “drill, baby, drill.”
Trump wants to boost domestic oil extraction in order to reap the political benefits of lower gas prices. This, however, isn’t easy to do. Oil is a global commodity and the U.S. is now a massive crude oil exporter. Increasing Venezuelan oil production would in theory lower oil prices somewhat, but, all else being equal, lower prices mean lower profits for oil companies. Lower oil prices also make it more difficult to justify costly investments in new, high-cost, risky, or otherwise marginal oil fields.
The media talks a lot about how Venezuela has the largest oil reserves in the world (reportedly over 300 billion barrels), but a more important number to understand is its current level of production. The U.S. Energy Information Administration (EIA) shows that Venezuela produced a little less than 1 million barrels of crude per day (MMbbl/d) in 2024, a steep decline from its peak production of 3.5 MMbbl/d in the 1990s. By contrast, the United States produced more than 13 MMbbl/d of crude in 2024 – so much that we exported over 4 MMbbl/d of it.
Which means that the U.S. is now exporting crude oil at a higher rate than Venezuela has ever produced.
Industry observers all agree that increasing Venezuela’s oil production will be neither cheap nor quick. Rystad Energy estimates that only 0.3 MMbbl/d of additional production will be possible in the next 2-3 years, and to return to the level of 3 MMbbl/d would take until 2040 and require $183 billion in capital expenditures. So, U.S. consumers won’t be seeing much benefit for years to come – if ever.
Oil Bailout Cometh?
Trump has been saying a lot of contradictory things about Venezuela. All signs point to him thinking the industry will agree to invest $100 billion in the country and that Trump himself will “control” the oil “indefinitely.” Last Friday, Trump gathered the industry heads at the White House, but the big news from the televised meeting was ExxonMobil’s CEO Darren Woods saying that Venezuela was “uninvestible,” at least for the moment.
The oil industry is not fully aligned with Trump, but neither is the industry itself united. No doubt some oil companies are interested in securing access to Venezuela’s oil, but only if they can negotiate conditions that ensure their profitability. As corporations often try to do, they will try to push any risks off onto the Venezuelan people (and U.S. taxpayers) while maximizing their own profits.
Stateside,U.S. domestic oil producers facing low prices and a market glut are increasingly angry with Trump’s action, with some telling reporters that they are “pissed” and speaking about Trump’s “betrayal.” Low oil prices already seem to be triggering a downturn in communities like Midland, TX in the Permian Basin. Gulf Coast refiners, on the other hand, are likely happy to start receiving shipments of Venezuelan heavy crude for the first time in years.
No one knows what will happen next, but the political and economic turbulence means that the oil companies have a strong negotiating hand – Trump may have to “incentivize” them to get what he wants. This spells nothing good for the Venezuelan people or the global climate.
The biggest subsidy Trump is handing out is, of course, the use of the U.S. military to ensure that the oil flows how and to where Trump wants it. Reportedly, Trump’s naval deployment has already cost $700 million, and could rise much higher over time. This hovering threat of military action is textbook ‘gangster’ imperialism and must be opposed. The Venezuelan people have the sovereign right to control their resources.
The oil industry already receives tens of billions of dollars a year in subsidies, but even more might be coming from taxpayers. What would it mean for Trump to offer “security” guarantees, and how much will that cost? Would Trump offer other financial support through the U.S. Export-Import Bank or the Development Finance Corporation? Or perhaps he seeks to directly “reimburse” any oil company investments, as he has repeatedly talked about? What will happen with the 30-50 million barrels of oil Trump has already claimed?
The only thing we know for sure is that we must put people and the planet ahead of Trump’s drive toward energy dominance.
