Trump's Venezuela Vendetta

[Jacob]

Krugman has a writeup on how the vast oil reserves of Venezuela may be somewhat overstated: https://paulkrugman.substack.com/p/the-emperors-new-oil-wealth

The two key points IMO are:

You may have heard that Venezuela has the world's largest oil reserves — 300 billion barrels. You probably don't know that Venezuela's reported oil reserves tripled while Hugo Chavez was president. This increase, from roughly 100 billion to 300 billion barrels, didn't reflect major new discoveries or exploration. Instead, it reflected the Chavez government's decision to reclassify the country's Orinoco Belt heavy oil as "proved" — oil that can be recovered with reasonable certainty under existing economic and operating conditions

and

As Torsten Slok of Apollo, who recently made this point, notes, "Much of the oil is extra-heavy, which has low recovery and a high cost to produce." This suggests that Venezuela's claims to have immense usable oil reserves were politically motivated hype.

[DGuller]

Machado and Trump may come to an agreement.  She'll give him her peace prize, he'll give her Venezuela.

[Maladict]

Machado and Trump may come to an agreement.  She'll give him her peace prize, he'll give her Venezuela.

I really thought that was a joke 

[The Brain]

More expensive than a mass.

[Crazy_Ivan80]

Machado and Trump may come to an agreement.  She'll give him her peace prize, he'll give her Venezuela.

I really thought that was a joke 

She be making a bad deal

[Richard Hakluyt]

There was a plentiful supply of oil in 2025 and the price fell from 79$ to 63$. This is with Russia, Iran and Venezuela being sanctioned and also a generally weak dollar. If the price falls further then shale oil production in the USA becomes unprofitable (the breakeven cost seems to be between 45$ and 70$ a barrel). I just can't see why the oil companies would want to waste money investing in an unstable country given these facts.

I suppose Venezuelan oil could substitute for oil from Alberta if Trump wanted to put the squeeze on Canada?

[Richard Hakluyt]

Link https://www.eia.gov/todayinenergy/detail.php?id=66944

[crazy canuck]

I suppose Venezuelan oil could substitute for oil from Alberta if Trump wanted to put the squeeze on Canada?

If the Americans find somebody to invest a lot of money and time into building up the necessary infrastructure to replace Alberta's oil supply, sure.

[HVC]

There was a plentiful supply of oil in 2025 and the price fell from 79$ to 63$. This is with Russia, Iran and Venezuela being sanctioned and also a generally weak dollar. If the price falls further then shale oil production in the USA becomes unprofitable (the breakeven cost seems to be between 45$ and 70$ a barrel). I just can't see why the oil companies would want to waste money investing in an unstable country given these facts.

I suppose Venezuelan oil could substitute for oil from Alberta if Trump wanted to put the squeeze on Canada?

I guess eventually, but do they have the port and logistics infrastructure in place in the US?

[Richard Hakluyt]

It would take many years I think and the oil companies would surely drag their heels as well.

[Josquius]

Krugman has a writeup on how the vast oil reserves of Venezuela may be somewhat overstated: https://paulkrugman.substack.com/p/the-emperors-new-oil-wealth

The two key points IMO are:

You may have heard that Venezuela has the world's largest oil reserves — 300 billion barrels. You probably don't know that Venezuela's reported oil reserves tripled while Hugo Chavez was president. This increase, from roughly 100 billion to 300 billion barrels, didn't reflect major new discoveries or exploration. Instead, it reflected the Chavez government's decision to reclassify the country's Orinoco Belt heavy oil as "proved" — oil that can be recovered with reasonable certainty under existing economic and operating conditions

and

As Torsten Slok of Apollo, who recently made this point, notes, "Much of the oil is extra-heavy, which has low recovery and a high cost to produce." This suggests that Venezuela's claims to have immense usable oil reserves were politically motivated hype.

Interesting to think they might have oversold their own overthrow.

[HVC]

Krugman has a writeup on how the vast oil reserves of Venezuela may be somewhat overstated: https://paulkrugman.substack.com/p/the-emperors-new-oil-wealth

The two key points IMO are:

You may have heard that Venezuela has the world's largest oil reserves — 300 billion barrels. You probably don't know that Venezuela's reported oil reserves tripled while Hugo Chavez was president. This increase, from roughly 100 billion to 300 billion barrels, didn't reflect major new discoveries or exploration. Instead, it reflected the Chavez government's decision to reclassify the country's Orinoco Belt heavy oil as "proved" — oil that can be recovered with reasonable certainty under existing economic and operating conditions

and

As Torsten Slok of Apollo, who recently made this point, notes, "Much of the oil is extra-heavy, which has low recovery and a high cost to produce." This suggests that Venezuela's claims to have immense usable oil reserves were politically motivated hype.

Interesting to think they might have oversold their own overthrow.

Not the first time Trumps gone bankrupt making bad real estate deals. Although it would be his first time to do it to a country. But if anyone can do it it's a guy that many times over failed at being a casino owner.

[OttoVonBismarck]

There was a plentiful supply of oil in 2025 and the price fell from 79$ to 63$. This is with Russia, Iran and Venezuela being sanctioned and also a generally weak dollar. If the price falls further then shale oil production in the USA becomes unprofitable (the breakeven cost seems to be between 45$ and 70$ a barrel). I just can't see why the oil companies would want to waste money investing in an unstable country given these facts.

I suppose Venezuelan oil could substitute for oil from Alberta if Trump wanted to put the squeeze on Canada?

Yeah, at current prices while many already drilled American wells remain profitable, the $ doesn't make sense to aggressively develop new wells.

The press isn't discussing it as much outside of industry / business journals, but a big thing going on is OPEC has basically abandoned for the time any pretense of restricting supply to prop up prices. Too many of the big OPEC countries want to produce more to grab more market share, and you haven't seen the cartel do much like it has traditionally done to artificially jack prices up.

This isn't good long term for U.S. oil companies, which benefit much more than many of the OPEC countries do from higher prices (due to most of them being lower cost producers.)

There's also probably a meta issue in that the U.S. high production relative to current proven U.S. reserves, we're speed running depleting our own reserves which isn't something I suspect the Trump Admin even thinks about.

[crazy canuck]

It would take many years I think and the oil companies would surely drag their heels as well.

Yeah, to your main point - there is no reason for them to make those sorts of investments of time and money.

[grumbler]

More expensive than a mass.

Caracas is worth a mass?