ArcaMax

After the capture and arrest of Venezuelan President Nicolás Maduro, President Donald Trump announced plans to revitalize Venezuela's struggling oil industry with American investment.

Putting aside the huge political and legal issues, the question I have fielded boils down to this: What will this mean for energy prices?

With an estimated 303 billion barrels of proven reserves, roughly 17 percent of the world's total supply, Venezuela has the largest oil reserves on the planet.

But here's the catch: having oil and actually getting it out of the ground profitably are two very different things. Although Venezuela was one of the five founding members of the Organization of the Petroleum Exporting Countries (OPEC) in 1960 (the other four were Iran, Iraq, Kuwait, and Saudi Arabia), its oil production has collapsed dramatically since peaking at 3.5 million barrels per day (bpd) in the 1970s, which at the time represented over 7% of global oil output.

In the early 2000s, the country still produced around 3 million bpd, but that amount fell below 2 million during the 2010s, and now that amount is just 1 million barrels daily —a measly 1% of global oil production, and about the same production level as the U.S. state of North Dakota.

That makes Venezuela only the 18th-largest oil producer worldwide, despite those massive reserves. There are two additional hurdles about monetizing Venezuelan oil: (1) about three-quarters of it is “heavy and sour,” which is hard to extract and to refine and (2) the infrastructure has been degraded by decades of under-investment and mismanagement.

Shortly after Maduro and his wife were captured, Trump said that U.S. oil companies would “spend billions of dollars, fix the badly broken infrastructure” and “start making money for the country.”

But rebuilding would likely take years, not months. You can't flip a switch and suddenly have a functioning oil industry. It requires enormous capital investment, legal frameworks that protect foreign contracts, and political stability — none of which are guaranteed.

Additionally, with crude oil prices currently below $60 per barrel, there may not be enough financial incentive for companies to make such a massive long-term investment. It's a risky proposition even in stable countries — let alone in Venezuela, which is experiencing political upheaval, according to David Oxley of Capital Economics.

He notes that “even if the political environment backdrop was more predictable, in a world already awash with oil, the business case for significantly ramping up drilling in Venezuela is far from strong.”

Even if production were successfully restored to levels from a decade ago, it would add only about 2% to global supply, which is not exactly going to move the needle on prices, at least in the short term.

The good news is that even without added Venezuelan supply, West Texas Intermediate crude oil dropped more than 22% in 2025, and gas prices are down about 25 cents per gallon compared to a year ago, according to AAA.

Several factors are contributing to this, including surging U.S. oil production. Over the longer term, increased Venezuelan oil production could contribute to lower energy prices, particularly for diesel, which is an important factor in transportation costs.

The bottom line: We should all manage our expectations for lower energy prices for the immediate future. Venezuela's oil potential is obvious but translating that potential into reality — and into savings in your weekly budget — is a complex, expensive, and lengthy process.

For now, you might be better off enjoying the recent current decline in crude oil and gas prices, which has more to do with existing global supply and demand, rather than anything happening in Caracas.

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(Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com)

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