Former Exxon VP: Sorry, but Venezuela’s oil won’t save Americans at the pump | Opinion

By Jack Balagia, KBH Energy Center Executive Director.

Gasoline prices are seen at a Chevron gas station in Houston, Texas, on March 16, 2026. Oil prices retreated and equities rose Monday as investors remained focused on the Strait of Hormuz, with US allies pushing back against President Donald Trump’s demands to help reopen the key waterway to oil and natural gas tankers. (Photo by RONALDO SCHEMIDT / AFP via Getty Images)

Following his trip to Venezuela earlier this month, Interior Secretary Doug Burgum seemed to imply some reprieve from the Iran War’s impact on world energy supplies when he called the South American country “a strategic ally with the largest reserves with no threat of the chokehold like we have in the Strait of Hormuz.” In the same March 8 interview with Fox News, Burgum added that “Venezuelan oil can flow to America freely and is starting to flow, will continue to flow, and these are the kinds of things that are going to bring gas prices down in America.”

The secretary undoubtedly chose his words carefully. He did not say that Venezuelan oil would cushion the current crisis in the Middle East, and for good reason. It won’t.

Chevron and other companies are moving toward expanded production agreements in Venezuela, and Energy Secretary Chris Wright told CNBC that production has increased 20% in three months. But any significant increase in production will happen far in the future.

Venezuela’s output recently hovered at less than 1 million barrels per day, far below its peak of 3 million in the late 1990s and early 2000s. Decades of mismanagement and corruption within the country’s oil company, PDVSA, under Hugo Chávez and his successor, Nicolás Maduro, combined with international sanctions and the deliberate exclusion of Western investment, have severely damaged the country’s energy industry. Having the world’s largest oil reserves means nothing without the infrastructure to tap and export production.

Since Maduro’s capture on January 3, the Trump administration has moved quickly to establish a legal framework for oil companies to move back, relaxing sanctions on PDVSA, issuing a series of general licenses from the Treasury to market Venezuelan crude, sell diluent (a product used to allow Venezuela’s thick crude to flow through pipelines) and open pathways for upstream contract negotiations. Under a U.S.-supervised oil marketing arrangement, Venezuela transported more than 280,000 barrels a day to the United States in February, with proceeds flowing into a U.S.-controlled account rather than to the Venezuelan government directly.

However, it is one thing to license and sell existing production — it is quite another to attract the capital investment required to bring Venezuela’s output up to a level that can move the global market.

Fixing Venezuela’s oil and gas industry will be a massive job. President Donald Trump has called for at least $100 billion to rebuild it, and MarketWatch reportsthat number could reach almost $200 billion. To put that in perspective, ExxonMobil, Chevron and ConocoPhillips combined report spending only less than $50 billion a year on all their projects worldwide — and those figures reflect an intense capital discipline the companies have maintained since the pandemic. There are much safer places in the world to invest their shareholders’ money than Venezuela.

Then there are the legal hurdles. FTI Consulting, advocating for a Venezuela settlement commission to resolve outstanding claims against the country and PDVSA, estimates that unsatisfied liabilities from external arbitration awards of at least $150 billion. ConocoPhillips alone holds $10 billion in outstanding arbitration claims stemming from the 2007 nationalization — the largest financial grievance of any U.S. oil company against Venezuela.

Venezuela has taken steps by passing a new hydrocarbon law seeking to open its oil sector to foreign investment, and certainly the easing of U.S. restrictions on Venezuelan exports is an important step. But those changes mean little without credible protections against a government with a history of seizing assets. And uncertain policies in Venezuela are not the only problem, as U.S. government views toward fossil fuel development continue to ping-pong under each new administration. Until industry players are satisfied that invested capital is genuinely secure, and that legal and regulatory regimes in both countries can be trusted, the gap between the Trump Administration’s ambitions and boardroom reality is likely to persist.

Venezuela’s ability to return to its peak early-2000s production levels would have a meaningful impact on global oil supply — but it isn’t happening now. And now is when Americans are facing $100-a-barrel oil. The opening in Venezuela creates a real opportunity, but converting that opportunity into barrels will take years of work, hundreds of billions in capital investment, the resolution of outstanding legal claims and governance reforms that have yet to take hold. Until then, the world’s largest oil reserves will remain underground and will not resolve a market strained by a crisis in the Strait of Hormuz.

Jack Balagia is adjunct professor and executive director at the Kay Bailey Hutchison Energy Center at the University of Texas at Austin and is the former vice president and general counsel at Exxon Mobil Corp.