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Another Manifestation of the Trump Ego Based Agenda

Since the U.S. kidnapped Venezuelan President Maduro on January 3d, President Trump’s ego maniacal motivation has become increasingly clear. As NYT columnist Tom Friedman put it, “Sorry to tell you, but last Saturday was “O-Day,” not “D-Day.” Trump and his associates asserted that US oil companies will produce the oil with economic benefits to both the U.S. and the people of Venezuela.

The questionable economics of large-scale production of oil from Venezuela

1. The industry is a mess. Production has fallen from a peak of roughly 3.45 bpd in 1998 to less than 1 million bpd today. Venezuela’s midstream infrastructure has reached an advanced state of disrepair. Much of the country’s pipeline network is more than 50 years old. Corrosion, leaks, pump failures and deferred maintenance are common. “You’ve got storage facilities literally sinking into the ground, broken wellheads and degraded infrastructure across the board,” one expert noted.

2. Returning Venezuelan oil production to past levels over 2 million barrels per day, will require tens of billions of dollars in investment and about a decade of work. Yet Administration officials refer to potentially much larger production levels. Industry experts estimate billions of dollars in investment would need to be committed in the next two to three years for Venezuela to return to 3 million barrel-per-day production by 2040 -- equivalent to Exxon Mobil’s capital spending all over the world each year.

3. V’s oil reserves are frequently cited as the largest in the world, but the veracity of these estimates are debatable due to political manipulation and large role of very heavy crude (“peanut butter” like consistency) in remote locations difficult to produce and refine. Reserve estimates are closely related to production costs and the market price of oil – the bulk of Venezuela’s reserves would only be commercially relevant at very high prices of about $80 a barrel. Trump wants the oil price to drop to $50 a barrel.

4. The country’s uncertain political future and Trump’s continued support for the Maduro regime is another source of risk for long-term investment. The government remains a brutal dictatorship with many regions controlled by paramilitary operations. Oil companies want stability, not dictatorships and have reacted accordingly – e.g., Exxon’s CEO called it “uninvestable.” Trump will soon discover that the only way to revive major American oil investments in Venezuela is to revive Venezuela’s democracy.

5. Fixing the electrical grid will cost billions, require years, and is a pressing imperatives. The Venezuelan oil sector is more dependent on the public utility grid than is typical for oil-producing countries. Restoring the reliability of the grid, and making electric power into a self-sustaining business, will likely be foundational for oil sector development.

6. The oil industry currently suffers from a massive supply glut. Near term demand for oil is highly uncertain as demand from China and multiple developing countries slows. Experts predict oil companies will be gravitating toward low-cost, low-risk opportunities for investment.Longer term demand also remains highly uncertain reflected in 2025 IEA projections.Rather than a single forecast, the IEA presents three alternative scenarios with divergent implications, from slow but steady growth to a significant decline consistent with 1. climate change goals. Meanwhile There are multiple countries are increasing oil production including Brazil, Canada, Guyana and Argentina, also possible Libya, Sudan, and Kazakhstan.

7. Shortages of skilled technicians are severe. Beginning in the early 2000s, highly experienced industry professionals left the ranks of senior management to be replaced with military officials and supporters of Hugo Chazez. Hyperinflation and lack of economic opportunity led a fourth of the population to leave the country in the past decade, including large numbers of technically skilled workers. Bringing them back — or hiring skilled workers, period — will be a heavy lift. Those issues are compounded by global trends: 60 percent of global energy companies have reported labor shortages, according to an IEA survey.

The enormous environmental impacts of increasing production of Venezuelan oil

1. The dominant sources of Venezuelan oil are thick, dirty, and polluting; “Most Venezuelan oil is what we call extra-heavy oil” — viscous and thick and has a higher sulfur as well as a higher carbon content than conventional crude, often referred to as like molasses.

2. Production of heavy, dirty crude is much more GHG intensive. Production of heavy oils, including those from Venezuela, can generate three to four times as much greenhouse gas than the production of conventional oil.

3. Production also has enormous gas flaring: gas flaring has been used in Venezuela for decades, but over the past decades corruption, mismanagement and insufficient infrastructure have led the country to burn off even more gas instead of collecting and utilizing it. In 2023, Venezuela was the fifth-largest flaring country in the world, according to the Global Gas Flaring Tracker Report produced by the World Bank. Last year Venezuela released more than 40 percent of its gas, “an insane number,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.

4. Many of Venezuela’s oil facilities are within 30 miles of protected areas and the source of frequent spills due to disrepair. One lake has been called “just an oil pit.” Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s state-owned oil and gas giant, has been called “the most accident-prone oil company in the world” by one union leader. An environmental watchdog, the Venezuelan Political Ecology Observatory, documented nearly 200 oil spills from 2016 to 2021 that were largely unreported by authorities.

5. Dirty oil will be refined primarily in black communities along the coast of Texas and Louisiana, a source of pollution and health concerns. Facilities in these locations make up the densest regional cluster of large refineries on the planet, originally designed for processing dense, sulfur-rich crude from countries like Venezuela.

For Trump invading Venezuela was, like so much of his initiatives, an ego trip with little if any long-term benefit to the United States. The same is very likely the case for Trump’s obsession with governing Greenland, an economy dependent on subsidies and shrimp. The people of Venezuela continue to endure a cruel dictatorship and the millions of those who left the country will have no incentive to return. Major oil companies will invest very little, if anything. Meanwhile the human and environmental damage will be enormous.

Alan Miller is a former climate change officer in the International Finance Corporation (2003–13) and climate change team leader, Global Environment Facility (1997–2003). Besides other engagements, Alan is an active editor for Climate Conscious submissions on Medium.