TIPP: Biden’s strange infatuation with Venezuelan oil

By TIPP EDITORIAL BOARD, TIPP Insights

The Biden administration is desperate to put a dent in the ongoing energy crisis. Though thankfully, this time, he’s not dipping into the country’s Strategic Petroleum Reserve (SPR), Washington’s latest efforts are equally unpalatable.

President Biden is lifting Trump-imposed sanctions on Venezuela. Chevron’s license is being renewed to work with Venezuelan government-owned oil company PdVSA to produce oil. There are more carrots in the basket for President Maduro. Caracas assets, amounting to $3 billion, will be unfrozen. Washington expects the fund will be “managed by the United Nations” and the autocrat will not dip into it.

Though Venezuela was once a large and reliable oil producer, industry experts point out that the country’s petroleum infrastructure has since deteriorated. Corruption, mismanagement, and lack of timely upgrades are largely to blame for the current state. Rampant crime and lawlessness in the country add to the challenge.

Capital input and fresh manpower will be required before PdVSA can significantly ramp up production. There is also fear that PDVSA’s most popular exportable grades have shrunk. But with President Maduro in power, the abovementioned problems will likely be around for a while.

Despite the deplorable state of its oil industry, Caracas trades its limited production with countries like Cuba, China, and Iran. The choice of partners suggests that despite his unpopularity within the country, President Maduro has the support of other governments equally at loggerheads with the U.S. The nexus does not bode well for Washington’s plans to steer the regime onto a different course.

Besides adding to the world’s oil supplies to offset Russia’s share, the Biden team’s sops have a larger goal – to get the Venezuelan leader to the negotiating table with the country’s opposition in the hopes of conducting free and fair elections. Under President Maduro, the country has fallen into a quagmire of troubles – hyperinflation, severe food crisis, rising mortality and crime rates, and declining freedoms. The deplorable humanitarian conditions have forced around seven million citizens to leave the country.

A stable Venezuela and better living conditions are necessary to stop the exodus of Venezuelans. Many Venezuelans travel across multiple countries, often facing dangerous situations hoping to find a safe haven in the United States. President Biden’s lenient border policy and erratic immigration programs have led to border clashes, uncertainty, and misery for those seeking asylum.

President Biden is desperate to do something as energy prices eat into everyone’s budget. With the advent of the holiday season, people feel the pinch of inflation and limited disposable income.

Washington hopes increased production in Venezuela will mean more oil for the United States, boosting holiday travel and cheer. But that is not set in stone. It will likely take months before Caracas oil significantly contributes to the oil market. By some estimates, the country may, at best, meet 0.2% of the world’s demand for oil in the next couple of years.

If democracy, as the White House suggests, is the goal, trusting an autocrat who has already rigged one election with the onus of conducting another seems counterintuitive. President Biden’s foreign policies have repeatedly failed to hit the mark. Venezuela will most likely join the growing list.

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