When people think of the US’ operations in Venezuela last month, they usually envision the high-profile arrest and removal of dictator Nicholás Maduro. For years, the South American nation has been under Maduro’s totalitarian regime, and many Venezuelans celebrated this momentous liberation, with dozens gathering outside the courthouse to celebrate his detention, according to The Guardian. However, the real significance of the operation is the US’ newfound ability to expand our crude oil supply.
Venezuela is home to the world’s largest natural reserves, sitting at 300 billion barrels of crude deposits locked underneath its land. This amount of oil is enough to supply all U.S. cars for 40 straight years, according to the U.S. Energy Information Administration (EIA). For many years, American companies have been locked out of accessing this vast wealth of natural resources due to sanctions imposed upon former President Maduro’s regime by the US.
Over the past two decades, Venezuela’s oil production fell from a high of over 3 million barrels of oil a day to around 700,000, according to an independent report by the Organization of Petroleum Exporting Countries (OPEC). A main contributor to this decline was the mismanagement of the national oil company of Venezuela, also known as PDVSA.
Beyond the re-opening of the historical oil trade, this new opportunity also sets up the US to gain more independence in the energy sector. Instead of relying on inflow from the Middle East, which can be volatile with price fluctuations based on geopolitical tensions, our nation will be able to have another source of heavy and sweet oil (required by American oil refineries). This excess supply, if successfully integrated, is set to drive energy prices lower for the rest of the decade, according to MarketMinute.
According to The New York Times, President Trump claims that multiple American companies have pledged over $100 billion to fixing Venezuela’s failure at exporting its vast oil reserves. Chevron pledged to increase production of crude oil to 300,000 barrels per day up from 240,000.
According to the American Association of Petroleum Geologists the price per barrel is expected to decrease by $5 to $10, leading to a $0.12 to $0.24 difference in the price per gallon of gas in the US.
Ultimately, boosting the American economy is truly what matters and by reducing the price of gas for Americans will play a large role in the financial stability of Americans amidst a national affordability crisis.
