Krugman Says Trump’s Venezuela Oil Prize Is A Fantasy

Economist Paul Krugman has poured cold water on President Trump’s claims that the United States will reap vast wealth from Venezuela’s oil fields, arguing the prize Trump imagines simply does not exist.

Writing on Substack, the Nobel Prize–winning economist said Trump’s post-Maduro rhetoric was revealing. During what Krugman described as a “triumphalist” press conference after U.S. forces captured Nicolás Maduro, Trump never mentioned democracy — but repeatedly invoked oil, using the word 27 times.

Krugman rejected the idea that U.S. oil companies could unlock a bonanza by taking control of Venezuelan production. While Venezuela is often cited as holding the world’s largest oil reserves, he said that figure is misleading. Much of the oil was reclassified as “proved” for political reasons, despite being extra-heavy crude that is difficult and expensive to extract.

Citing economist Torsten Slok, Krugman noted that much of Venezuela’s oil has low recovery rates and high production costs, making it commercially unattractive. With global oil prices suppressed by expanded supply from U.S. fracking, the economics simply do not add up. Krugman said a break-even price of roughly $62 a barrel would leave little to no profit for companies operating in Venezuela’s degraded infrastructure.

“In short,” Krugman wrote, Trump’s belief that he has captured a lucrative oil prize is an “unrealistic fantasy,” even assuming Washington truly controls a country still dominated by the same power structures as before Maduro’s removal.

Trump has claimed Venezuela will hand over 30 to 50 million barrels of oil to the U.S., with proceeds controlled directly by the White House to benefit both countries. He has framed oil as central to his plan to “run” Venezuela after U.S. strikes on Caracas, branding the former government a drug-trafficking “terrorist cartel.”

Lawmakers remain divided. Republicans argue stabilization will take time, while Democrats warn the administration appears to have no plan beyond oil.

Key Takeaways

1. Krugman Calls It Oil Fantasy: The economist says Venezuela’s oil is far less valuable and far harder to extract than Trump claims.

2. Reserves Don’t Equal Riches: Much of Venezuela’s oil is extra-heavy crude with high costs and low profitability.

3. Political Blowback Grows: Lawmakers warn Trump’s Venezuela strategy looks driven by oil, not democracy or reconstruction.

SOURCE: THE HILL

https://www.ft.com/content/4c21c031-443e-4834-a7a6-3dd59672b54e

https://www.ft.com/content/4c21c031-443e-4834-a7a6-3dd59672b54e

ExxonMobil has warned that Venezuela remains “uninvestable” without “significant changes” in a rebuke to Donald Trump’s call for oil companies to pour billions of dollars into revitalising its oil industry.

Darren Woods, chief executive of the biggest US oil major, struck a sceptical tone at a televised White House gathering of energy bosses on Friday — even as some other companies expressed optimism about the potential to tap the world’s biggest oil reserves.