America Can Have the Oil
María-Elena Pombo has created “petroleum weavings,” turning threads made from oil into elaborate yarnlike wall hangings. Oil, she told us, has shaped her life. Her father, an oil engineer, met her mother after he moved to Cabimas, an oil town. Because of Venezuela’s oil wealth, Pombo, now 37 years old, studied for free at an excellent public university in Caracas.
For decades, all Venezuelans enjoyed the perks of living in a land where oil was a birthright. They could fill their cars for almost nothing. Education and other public services were heavily subsidized as well. Academics might argue over the wisdom of the state’s largesse. But people expected, at the very least, affordable gas as a material benefit from the nation’s abundance of oil.
President Trump’s military intervention in Venezuela this month was, in part, a bid to seize the source of this wealth. Venezuela has the largest oil reserves in the world. Trump made no secret of his desire to exploit them in what many have criticized as an act of naked imperialism and the theft of Venezuela’s economic patrimony: “We’re going to be using oil, and we’re going to be taking oil,” Trump said in an interview after the January 3 attack that captured the strongman President Nicolás Maduro and his wife.
Yet many Venezuelans in the country and abroad celebrated the strike. María Corina Machado, the popular leader of the opposition, has welcomed Trump’s actions. Last February, Machado was a guest on Donald Trump Jr.’s podcast. When he asked why Americans should care about Venezuela, her first response was: “Oil and gas.” Machado’s strategy could appear to have been a devil’s bargain—tempting Trump with the prospect of petrodollars in exchange for ousting Maduro, her nemesis. But her feelings reflected something broader, too: Venezuelans who once viewed oil as a source of wealth and pride, a limitless resource that had shaped their identity and set their country apart from its poorer neighbors, have come to view it more as a curse.
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Venezuelans in the past two decades have watched as the regime squandered the wealth that oil had created, let the country’s oil infrastructure rot, removed gasoline subsidies, and welcomed a bigger hand from Cuba, bartering oil for professionals and intelligence operatives from Havana. Pombo says her generation is the last that benefited from oil. Today, the university where she studied is in such a sorry state that the roof of one of its buildings collapsed. In the former boomtown of Cabimas, in northwestern Venezuela, people grew so desperate that they jury-rigged refineries in their own backyards because gasoline had become so scarce and expensive.
By that measure, ceding the oil industry to the United States at least holds the promise of importing industrial know-how with some financial benefit for the country. A poll by The Economist found that a majority of Venezuelans “somewhat” or “strongly” supported the capture of Maduro and were optimistic about their economic prospects. Fewer than 35 percent thought that the Venezuelan government should continue running Venezuela’s oil industry. Or as Sary Levy-Carciente, Machado’s economic adviser, put it to us, the Americans will be “better clients.”
At a ranch in Cabimas one day in 1922, local farmers were awoken by a bang followed by a black rain. Workers for Shell, an Anglo-Dutch company, had been poking holes in the ground, looking for oil—and struck it rich. A plume spouted for many days. Some viewed the discovery as a divine gift, while a local priest chastised the explorers for unearthing Satan, saying the blowout was God’s punishment. Word traveled northward, and the Rockefellers of Standard Oil and the Mellons of Gulf Oil saw a business opportunity. The episode ushered in more than a half century of relative prosperity.
Even then, some saw signs of trouble. In the 1930s, Arturo Úslar Pietri, an influential intellectual and historian, argued in an essay that the country needed to “sow the oil” by investing oil profits to cultivate other industries. Generation after generation of schoolchildren have heard these words repeated as advice that the country should have followed but didn’t. Instead of sowing the oil, Venezuela became dependent on it.
American companies arrived to drill the wells and build the fields. They brought with them country clubs and baseball. The companies made deals with whichever military despot was in power in Caracas, angering young intellectuals such as Rómulo Betancourt, who harbored dreams of a democratic Venezuela. In his writings, he condemned “the aggressive, juvenile impetus of North American capitalism” and advocated for Venezuelans to be the owners of their oil.
Betancourt became president through a coup in 1945, putting him in position to fulfill his goal of a democratic constitution. But he exercised caution over oil. He didn’t kick out the Americans but instead persuaded them to pay more. He then used those proceeds to build schools, hospitals, and roads. Starting in 1948, American companies extracted the oil and gave roughly half of the profits to the Venezuelan state, an arrangement known as el fifty-fifty.
Betancourt’s stance that Venezuela resented America but needed America is reflected in Miguel Otero Silva’s 1961 novel, Oficina No. 1. The story follows pious, rural Venezuelans who leave everything behind to move to a nameless town where newly arrived Americans are extracting oil with little foresight or planning. The Trinidadian driver who takes the Venezuelans to the fields sings a song in English, as if warning about the type of people the Americans are: “After Johnny eats my food, / After Johnny drinks my rhum, / After Johnny wears my clothes, / Johnny comes back and takes my wife.” But the Venezuelans pay him no mind. They moved to a town with no name because that was their best hope.
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Yet many Venezuelans idealize this period. The years of el fifty-fifty were some of the most prosperous in Venezuelan history—a time when migrants were eager to come to Venezuela, rather than leave it, as they have in droves more recently. Hundreds of thousands from Europe and elsewhere arrived for the glorious tropical climate, golden Caribbean beaches, and plentiful job opportunities. The possibilities felt limitless. The country built some of the world’s most futuristic highways and was early in eradicating malaria. When Christian Dior decided to open his first shop in Latin America, he opened it in Caracas. The Concorde, that majestic superfast airplane, flew in at least once a week. Oil was the draw that brought the world to Venezuela. Even Venezuela’s shanties were made with solid construction materials such as brick and concrete, made cheap by a strong bolivar, Venezuela’s currency. It was not uncommon to see new cars parked outside. And although the Venezuelan poor could not afford the shopping trips that the country’s rich made to Miami, they could go to Margarita—a Venezuelan island famous for its beaches and low tax rates.
By 1976, however, Venezuela’s political class had tired of el fifty-fifty. The government seized the assets of American companies and nationalized the oil industry, creating a state-owned giant Petróleos de Venezuela, known as PDVSA.
For years, the company thrived. José Guerra, a Venezuelan economist, told us that graduates aspired to land PDVSA jobs. (He didn’t make the cut as a young man, and had to settle for a job at the central bank.) The government funded scholarships so that the best and brightest could study abroad and become PDVSA engineers and managers. For Luis Soler, who worked at PDVSA for 30 years, the company represented a certain idea of meritocracy. It had an American-style work environment complete with 9-to-5 workdays and a corporate ladder for promotion. “We had discipline, values,” he said.
By the 1990s, PDVSA had become one of the largest and most influential state-owned oil companies in the world, second only to Aramco, its Saudi counterpart. Venezuelan leaders proved to themselves that they could competently manage the country’s oil.
Yet as Pietri had predicted more than a half century before, the country had failed to spread the wealth sufficiently to bolster other industries. “We just traded it! We traded it, and for what? Cars from the United States, whiskey from Scotland, fabrics from Italy, perfumes from France,” Rafael Quiroz, an oil economist at the Central University of Venezuela in Caracas, told us. “And as time passed, we didn’t build anything. We didn’t use the oil to make an economy.”
Those outside the circle of PDVSA profits grew resentful. Seeds had been sown, but not for broad economic growth, as Pietri had once hoped, but for revolution.
The socialist Hugo Chávez came to power in 1999 and managed PDVSA for priorities other than maximum profits. He replaced thousands of highly trained company employees with party loyalists. And for the first decade of the 21st century, the state used oil as a tool of diplomacy, with Chávez lavishing petrodollars on tiny island nations whose votes he courted in the Organization of American States, a regional diplomatic forum. Venezuela replaced Russia as Cuba’s main oil supplier, a favor that Cuban President Fidel Castro returned by becoming Chávez’s mentor on authoritarianism. The consequences of the mismanagement were profound. A country that fully depended on oil became ill-equipped to produce it. After the oil boom, Venezuela somehow ended up poorer, beset by corruption and hyperinflation.
When Chávez died, in 2013, Maduro inherited a failing oil industry and did little to improve it. By 2020, Venezuela’s refineries had crumbled to the point that the country had to start importing gasoline from Iran. Even during the worst years of a humanitarian crisis, Maduro continued supplying his friends in the Cuban government with oil. (In January, the U.S. assault to capture Maduro killed 32 Cuban officers on the president’s security detail.) Venezuela now produces only about 1 percent of the oil in the world, a mere 1 million barrels a day.
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The perception that Maduro gave away oil to keep himself in power has made some Venezuelans more comfortable with the idea of giving oil to America, the country that got rid of the strongman. “Venezuela is going from having a government controlled by Cuba to having a government controlled by the United States,” the historian Pedro Benítez told us, adding that the U.S. can help with the huge investments needed to revive the oil industry.
The rise of Machado is its own testament to changing attitudes about oil. Of all the opposition leaders, Machado has spoken most consistently in favor of privatization and foreign investment. For a long time, these preferences made her relatively unpopular. But in recent years, her views have spread widely. Many Venezuelans would have liked to see Machado replace Maduro as part of a transition back to democratic government. But so far, the Trump administration has shown little interest in that, preferring instead to work with Delcy Rodríguez, Maduro’s vice president, and the rest of the regime. Like Betancourt, she portrays the United States as an unwelcome imperial power: “Enough of Washington’s orders to Venezuelan politicians,” she said on Sunday. But when it comes to oil, she’s ready to deal. In a speech before legislators this month, she said that she would proceed with an “agenda of cooperation” nonetheless. “Let’s not be afraid of contradictions,” she said.
American companies are poised to develop Venezuela’s oil industry anew. Trump said this month that Venezuela would provide 30 million to 50 million barrels of oil to the U.S., and that the sale of this oil would “benefit the people” of both nations. Rodríguez said that Venezuela had received $300 million from the sale, the first payments from those barrels. She celebrated the country’s much-needed share of the revenue.
Trump sees a fresh era of American investment from the oil giants of today. He recently hosted the chief executives from the major U.S. oil firms at the White House to pitch them on the prospect. But the challenges are legion, including the need for political stability in both Venezuela and the U.S. There are no guarantees that a new American administration would take the same tack as Trump. And although working with the regime has brought its country near-term calm—Venezuela is secured right now by pro-government militias—the Trump administration has spoken about an eventual political transition. This leaves Caracas in a governing limbo and U.S. companies wary. Only a stable government can provide sufficient security for the companies to commit to long-term investments.
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Over time, the key power brokers in Venezuela may splinter over their new fifty-fifty-style deal with the U.S. “The current arrangement is unlikely to be convenient at the same time for all of them. One of them or some of them will try to change it,” Jana Nelson, a top Pentagon official on Western Hemisphere affairs during the Biden administration, told us.
Even so, many in Venezuela seem guardedly optimistic. Guerra, the former central-bank official, used to be critical of the opposition for courting a U.S. intervention, but he’s now bullish about the economy. He envisions the U.S. government placing conditions on how the regime can spend future oil revenues to make sure the nation’s natural wealth is used to revive Venezuela.
We pointed out that this scenario rests on the assumption that Trump cares about the fate of Venezuela and its people. “Well, we cannot assume anything else,” Guerra told us. The Venezuelan people, he added, are “just onlookers, not actors. We are just looking at what’s happening, hoping for the best. We don’t get to determine anything.”