Based on reporting by CNBC Personal Finance. Research, structure, and fact-checking by Groundwork.
Trump's Venezuela oil deal won't lower gas prices anytime soon due to the need for huge investments to boost the country's oil output and the uncertainty
Based on reporting by CNBC Personal Finance. Research, structure, and fact-checking by Groundwork.
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You won't see lower gas prices from President Donald Trump's massive oil deal with Venezuela anytime soon because it will take years to significantly boost the country's production, and huge investments are needed to extract its proven oil reserves.
Venezuela's oil infrastructure is in a state of disrepair after years of mismanagement by its socialist government. The nation's oil production has been declining since the late 1990s, when it peaked at 3.5 million barrels per day (bpd). Currently, Venezuela is producing around 1.2 million bpd, down from its peak production.
According to Rystad Energy, it will require about $180 billion of investment through 2040 to return Venezuela to its peak production. While Secretary of State Marco Rubio said that Trump's deal will bring nearly $100 billion of private-sector investment to the country, this investment will not be enough to significantly boost oil output in the near term.
The legality and long-term viability of the agreement with Caracas are also uncertain, as the terms have not been disclosed by the Trump administration. David Goldwyn, who served as a State Department special envoy for international energy affairs under President Barack Obama, said that "nothing has been published, so we're really still operating on Tweets and rumors."
U.S. gas prices are currently $4.08 per gallon on average nationwide, nearly 30% higher than at this time last year, according to AAA data. Prices are rising due to Ukraine's attacks on Russian refineries and the supply disruption in the Middle East triggered by the Iran war. It is basically a foregone conclusion that gas prices will set a new all-time high for Labor Day, said Patrick De Haan, head of petroleum analysis at GasBuddy.
Unless we get some sort of effective 20-cent drop, which is next to impossible, it'll be a record-setting Labor Day in terms of the national average, De Haan said. Gas prices have never been this high this late into the year unfortunately. Venezuelan oil exports won't provide any near-term relief to U.S. drivers.
“The deal's terms are uncertain, and it will take years for Venezuela to significantly boost its oil production, making it unlikely to lower gas prices anytime soon.”
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David Sterling (2026). Why Trump's Venezuela Oil Deal Won't Lower Gas Prices Anytime Soon. Groundwork. Retrieved from https://gworky.com/article/trump-venezuela-oil-deal-gas-prices
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moneyNo, the deal won't lower gas prices anytime soon because it will take years to significantly boost Venezuela's oil production.
It will require about $180 billion of investment through 2040 to return Venezuela to its peak production.
David Sterling is a personal finance writer covering mortgages, banking, insurance, and investing for Groundwork. He turns complex financial research into practical decisions.
Chevron is the only major U.S. oil company currently active in Venezuela, through joint ventures with state-owned PDVSA. Chevron's production in Venezuela has increased 15% to 280,000 bpd this year, and the company expects to grow production up to 50% through 2028.
According to David Goldwyn, "this will have absolutely no impact on gasoline prices or Venezuelan production for that matter for years to come." Andy Lipow, president of Lipow Oil Associates, said that it is unclear which oil companies will invest in Venezuela to extract its reserves and how those deals will be structured.
Venezuela's oil infrastructure is in a state of disrepair after years of mismanagement by its socialist government.
Chevron's increased production in Venezuela may not significantly impact gas prices in the near term.
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