Experts doubt Trump-Venezuela oil deal will quickly lower U.S. gasoline prices
Analysts say the joint venture to develop 17 Venezuelan oil fields could take years to affect U.S. fuel costs, and legal and operational hurdles make near-term impact unlikely.
President Trump said a new agreement with Venezuela to develop 17 oil fields would "substantially lower gas prices for all Americans, long into the future." The fields hold about 65 billion barrels of proven reserves, according to Venezuelan state media, but experts warn that production from new discoveries can take 15 years or more to begin, and the heavy crude in Venezuela is harder to refine than the light crude typically used in U.S. refineries.
Tracy Shuchart, chief executive of Hilltower Resource Advisors, said on social media that it could take five to 15 years before enough Venezuelan oil reaches the United States to affect domestic gasoline prices.
"The announcement is a signal that the White House remains concerned about elevated fuel prices — though in reality, any benefits from increased Venezuelan output will take years to fully materialize and are unlikely to move the needle in the near term," wrote Patrick De Haan, a petroleum analyst at GasBuddy.
Investment bank UBS noted in an August 31 report that the venture faces legal and operational obstacles that make short-term production gains improbable. The U.S. side will hold a 55 % stake in the private joint venture, while Venezuela granted a 100-year concession for the fields.
Venezuela, which has the world’s largest proven oil reserves, has struggled with underinvestment; analysts estimate at least $100 billion is needed to restore its fields to full capacity. Production rose to about 1.1 million barrels per day in the second quarter, up from roughly 0.94 million barrels a day the previous year, but growth remains modest.
"From a U.S. oil company's perspective, any significant investment in Venezuela would generally need to be accompanied by a legal framework that could survive a change in leadership in both the U.S. and Venezuela," UBS analysts wrote.
Secretary of State Marco Rubio said the project could attract nearly $100 billion in private investment and create thousands of jobs. The White House plans a meeting with energy refiners and distributors, with spokeswoman Taylor Rogers stating the president is focused on “ensuring his successful energy dominance agenda translates into the most cost savings possible at the pump.”
Analysts also pointed to other factors influencing gasoline prices, such as recent U.S. military actions near Iran that pushed West Texas Intermediate crude up by nearly $3 per barrel. Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, told the Associated Press that the deal may be helpful in the long run but will not affect retail gasoline prices in the near term.