Trump’s Venezuela Actions Are About More Than Oil
Venezuela’s heavy crude is expensive to extract, it will take years of sustained investment to meaningfully lift output, and it may not even be profitable at current prices. The current aggression is more about power than economics.
After the brazen US invasion of Venezuela and removal of Nicolás Maduro from office, many on the Left have settled on a basic explanation: it’s all about the oil. Such an explanation relies on a familiar Marxist “instrumentalist” theory of the capitalist state that its primary role is to do the bidding of the capitalist class.
Certainly, the first and second Trump administration’s extreme deregulation of the oil and gas industry has not dissuaded many from this kind of interpretation. And, of course, in his press conference after the invasion, Donald Trump himself said the operation was indeed all about the oil. So this case appears to be closed. Yet if you actually inspect the political economy of the oil industry, the oil explanation starts to make less and less sense.
Is Venezuela’s Oil Even Profitable to Produce?
Oil markets work through commodity cycles of boom and bust. When prices are high, oil capital is keen on investing in new drilling. When prices are low, less so. While the current price level is somewhere in between (currently trading at $56/barrel and falling), prices are overall depressed, and have been for most of the last decade (apart from the boom associated with the Russian invasion of Ukraine in 2022).
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