Trump In Venezuela Isn't About The Oil

No, really, despite the usual screaming

Trump taking - kidnapping, arresting, to taste - Maduro and his wife simply isn’t about the oil business. Please note, this also isn’t about whether it’s a good idea or not although I’ll admit to thinking that it’s way damn cool - getting in and out of hostile territory without, so far as we know right now, a single American casualty at all? Damn cool in that military sense.

This is about the shrieking we’re getting from the usual suspects - this is all about the oil! See! Ms. Raisin is one I’ve seen online already, there are those quoting that Counterpunch article with the idiot Michael Hudson and so on.

My point is solely and only about access to that oil.

So, travel back 10 to 15 years.

Venezuela’s Orinoco Belt oil is very “heavy”. Technically it is about viscosity but think about it as “thick”. It’s more like treacle than it is like a free flowing liquid. There are also issues wth sulphur but leave that alone here. It is, in the technical parlance, “cheap shit”. So bad that it has to be mixed with much lighter (and usually “sweeter”, which means less sulphur) crude oil from different oil fields so you can pump it through a pipeline or get it into a tanker.

Venezuela used to have - still could have - fields of that light and sweet oil but they ran those fields - during and after Chavez - so badly that production fell over. So, they used to actually import US crude oil to then mix with that heavy crude so they could export. They also price petrol - gasoline - so low that they cannot possibly run refineries to make their own gasoline. So, they would import the US crude, mix it, export the blend to the US and then buy back the gasoline from those US Gulf Coast refineries. This was ridiculous, of course, but you know socialists with prices and economies.

It also meant that those US Gulf Coast refineries were adapted to use that Venezuela mix. You can change the mix a refinery uses but it’s potentially costly. The more the mix changes the more the cost rises. But the important thing to note is that the only refineries within cheap shipping distance that could use the Venezuela crude efficiently were those US Gulf Coast ones. Sure, they’d be pissed if they lost access to their supplies but they could be altered to work with other crude mixes. The reliance was much more of Venezuela upon the refineries than the refineries upon Venezuela - at least, the cost of adaptation to a change was lower for the refineries.

OK, so that was the old situation.

Over this past decade and a bit the US - under both Trump and Biden - has been saying, well, you know, we don’t think much of the Venezuelan Government. We also know the only money they get is from crude oil sales, so, if we refused to take that for those Gulf Coast refineries then we could screw with Maduro. Which is what happened - sanctions on Venezuelan oil exports which, most obviously, apply to people shipping into the US and so obeying US law.

Other people who do not, or don’t have to, obey US law haven’t, wholly, been abiding by those sanctions. OK. Maybe that’s all a good idea and maybe it isn’t - not my point here at all.

We should also note that the oil fields in Venezuela actually owned/managed by Chevron, a US company, have still been allowed to ship to the US and elsewhere under US law.

One more little fact. The US is now - as a result of fracking - a net oil exporter. This is also something done under Trump I, the lifting of the ban on crude oil exports. It can still be true that maybe buying in some Venezuelan oil - or Mexican, Canadian, whatever - meets either geographic or blend desires. We’d like some really heavy sludge, for example, or maybe Canadian oil works for Wyoming (not real examples, just ideas). But in terms of total oil production and usage the US produces more than it uses now. So any decision to import is about those marginal issues of location and blend, not urgent necessity for simple crude oil. Fracking works, d’ye see?

So, where does this leave us as of last week concerning oil?

The United States has, domestically and in law, limited the amount of Venezuelan oil that US citizens or companies may buy. So the US doesn’t need to invade Venezuela - or kidnap/arrest the President and his wife - in order to be able to buy Venezuelan oil. It can just change domestic law and allow US citizens and companies to buy Venezuelan oil.

QED, last night’s, this morning’s, events are not about US access to Venezuelan oil. For they’re not necessary to change US access to Venezuelan oil.

For those who say this is all like Iraq and so on, all about that stealing the oil. Have you noted that US individuals and companies pay the market price for Iraqi oil? Same price as everyone else? No? Then perhaps you should think about that.

Oh, and the other one. As and when the glorious happens and Iran is no longer oppressed by the Mullahs then the same thing will be true. Iranian oil will be sold at full market price to those who belly up a tanker to Bandar Abbas.

All of this shit about “It’s all about the oil” wholly misses, ignores, is ignorant of, markets.

But the big and important thing here about Trump, the US and Venezuela. No, it really ain’t about the oil. Because the reduction in US purchases has been because the US decided that it didn’t want to buy this stuff from oppressive, idiot, dictators like Maduro. If it was about the oil then the US would just have changed its own domestic law. They didn’t, therefore it’s not about the oil.