To temper rising oil prices, the Biden administration has flirted with lifting oil sanctions on previously shunned Venezuela, but it appears unwilling to encourage investment in domestic energy production.
Following Biden’s ban on Russian oil imports in response to Russian President Vladimir Putin’s invasion of Ukraine, White House and State Department officials traveled to Caracas earlier this month to meet with Venezuela’s authoritarian President Nicolás Maduro.
Following backlash, the State Department claimed that the trip was solely for the purpose of releasing detained Americans and “promoting the democratic aspirations of the Venezuelan people.” Despite the State Department’s denials, a source briefed on the Caracas meeting told The Financial Times that a partial lifting of oil sanctions was on the table.
Even if the Biden administration decides to lift US sanctions on Venezuela in the hopes of securing a new oil supply, experts say the country is still far from being able to ramp up production in time to help temper the current price spike. On average, the United States produces over 12 million barrels of oil per day, while consuming between 19.5 and 20 million. Venezuela’s output is simply insufficient to meet the needs of the US economy. In addition, Venezuela’s ailing oil industry is beset by technical and political issues. So why would the Biden administration consider it when there are better options available – ones that do not empower authoritarian dictators?
The Biden administration has had a tense relationship with the oil industry, which the president accuses of profiting from the current energy crisis. On the first day of his presidency, Biden cancelled the Keystone XL pipeline, which would have carried an estimated 840,000 barrels per day, displaced over 600,000 barrels of Russian oil, and employed thousands of people in the United States and Canada. In addition, Canadian oil is better suited for use in gasoline than Venezuelan oil.
In response to President Nicolas Maduro’s alleged human rights violations, the US imposed harsh sanctions on Venezuela’s state-owned oil company, PDVSA, and severed ties with the country. As a result, many critics of Biden’s decision have questioned why the US would reject its own oil, as well as that of Canada, in favor of an authoritarian regime that is openly hostile to the US.
Venezuela only produces 800,000 barrels of oil per day at most. That’s up from an average of 525,000 barrels per day a year ago, but it’s still a long way from the failed goal of 1 million barrels per day by the end of 2021, and nowhere near the more than 3 million barrels per day the country produced in the 1990s. Venezuela’s oil is also thicker and dirtier, making it better suited for asphalt and petrochemicals than for automobiles. A complicated refining process would be required to extract gasoline and diesel from Venezuelan oil.
Many of the engineers who ran Venezuela’s industry at its peak were exiled from the country during Hugo Chavez’s socialist dictatorship, when the socialist dictator nationalized the country’s oil industry.
Given the higher environmental impact of heavier oil, Dr. Brenda Shaffer, a senior energy adviser for the Foundation for the Defense of Democracies, told FOX Business that the Biden administration’s pursuit of oil in Venezuela was ironic.
The Biden administration’s policies, according to Phil Flynn, a senior energy analyst at The PRICE Futures Group, are “climate craziness.” He warned that declaring a climate emergency will only make investors nervous about fossil fuels, leading to shortages and record-high gas prices, as well as political unrest.
Oil prices were already at record highs before Russia invaded Ukraine due to lingering supply chain issues, but the war has exacerbated the situation. Despite this, Biden has conveniently blamed the price increase on alleged oil company profiteering and Russian President Vladimir Putin.