Why unlocking Venezuelan oil won’t mean much for US energy prices |
In the wake of U.S. forces’ arrest of Venezuelan President Nicolás Maduro, U.S. President Donald Trump has said the U.S. is taking over Venezuelan oil production.
In addition, the U.S. has blockaded Venezuelan oil exports for a few weeks and seized tankers that reportedly escaped from the blockade.
To understand what’s happening and what it means for U.S. consumers and the American energy industry, The Conversation U.S. checked in with Amy Myers Jaffe, a research professor at New York University and senior fellow at Tufts University who studies global energy markets and the geopolitics of oil.
What is the state of Venezuela’s oil industry and how did it get to this point?
Venezuela’s oil industry has experienced profound turmoil over its history, including a steady downward spiral beginning in 1998. That’s when a worldwide economic downturn took global oil prices below $10 per barrel at the same time as the Venezuelan public’s growing interest in reasserting local control of the country’s oil industry ushered in populist President Hugo Chávez.
In April 2002, Venezuelans took to the streets to protest the appointment of Chávez loyalists to replace the top brass of the national oil company, Petróleos de Venezuela. The chaos culminated in an attempted coup against Chavez, who managed to retake power in a matter of days. Petróleos de Venezuela’s workers then went out on strike, prompting Chávez to purge close to 20,000 top management and oil workers. That began a brain drain that would last for years.
In 2007, Chávez, standing in front of a banner that read “Full Oil Sovereignty, The Road to Socialism,” took over ExxonMobil’s and ConocoPhillips’ oil-producing assets in Venezuela. The companies had declined to accept new oil contracts at radically less profitable terms than they had in previous years.
After Chávez’s death in 2013, national economic chaos accelerated. By 2018, reports began to surface that roving gangs, as well as some oil workers struggling to survive, were stripping the industry of its valuable materials – computers, copper wiring, and metals and machinery – to sell on the black market.
U.S. sanctions added to........