Continental Resources chairman Harold Hamm discusses US interest in Venezuela’s vast oil reserves and more on ‘Kudlow.’
At first glance, it seems like a contradiction – and the left is quick to call it a moral failure.
America is swimming in oil, yet President Donald Trump has moved to bring Venezuelan pollution to US refineries. If the United States has no power, they ask, why is it buying oil from Venezuela at all? After years of sanctions and pressure on Caracas, isn’t this hypocrisy?
The answer is no. It’s a strategy. And it starts with a basic fact that most analysts ignore: America has a lot of oil — not always the right kind.
The shale revolution, powered by fracking, revolutionized US energy production. It flooded world markets with light, green oil and made the United States the world’s leading oil producer. That success strengthened national security and broke the hold of the old OPEC cartel.
VENEZUELA RE-OPENS OIL BARGAINS AND STARTS POTENTIAL EXPORTS PURCHASE FOLLOWING TRUMP ADMINISTRATION POLICY CHANGES
A pump jack stands next to an oil spill at the Petroleos de Venezuela SA (PDVSA) facility in the Orinoco Belt of El Tigre, Venezuela. (Bloomberg/Getty/Getty Images)
But fracking has also changed the mix of oil that America produces.
Most of the US refining system – especially along the Gulf Coast – was built decades ago to process heavy, sour crude. These refineries have invested billions in specialized equipment such as cokers, hydrocrackers and desulfurization units designed to convert thick, high-sulfur oil into gasoline and diesel efficiently.
If those refineries can’t access enough heavy pollutants, they operate at less than optimal efficiency. The harvest is falling. Costs are rising. Fuel supplies are becoming more fragile. And when hurricanes, outages, or global disruptions strike, that weakness shows up quickly at the tap.
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This is where Venezuelan oil comes in.
Export-Import Bank of the United States president and chairman John Jovanovic discusses what role the bank could play in Venezuela and the oil industry with ‘Claman Countdown.’
Venezuela produces some of the world’s largest crude – the exact same type that many US Gulf Coast refineries are being built to use. Moving those barrels to American ports allows these refineries to operate closer to design capacity. The result is straightforward: more petrol, more diesel, lower prices and more stable fuel supply.
That is energy economics. The strategic advantage in the American hemisphere is equally important.
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For years, China has been Venezuela’s biggest buyer, using opaque shipping arrangements and debt power to lock Caracas into dependence while expanding Beijing’s influence across Latin America. When Venezuelan barrels flow to US refineries instead of Chinese ones, Beijing loses that measure.
As for Russia, Moscow thrives on avoiding sanctions, proxy relations and instability near US borders. Venezuela’s oil trade focused on transparent, US-aligned markets severely limits Russia’s ability to use Venezuela as a geopolitical lever in the Western Hemisphere.
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The shale revolution, powered by fracking, revolutionized US energy production. It flooded world markets with light, green oil and made the United States the world’s leading oil producer. That success strengthened national security and broke the hold of the old OPEC cartel.
Then there’s Cuba – a link that’s largely overlooked but of great consequence. This communist island prison is an active platform for intelligence gathering, political meddling and regional coups. Cuba sends security services, embeds itself in allied powers throughout Latin America and acts as a conduit for Russian and Chinese influence. Subsidized Venezuelan oil has been the lifeline of that system.
Cutting off that funding weakens the communist army which exports repression and instability throughout the region. Even instability has consequences. Failed states and hostile actors drive migration pressures that eventually reach the southern border of the US. Those pressures don’t come out of nowhere; they are the downstream effect of negative energy and security policy in our environment.
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President Trump understands what his critics never have: a foreign policy that stabilizes oil prices, strengthens US industry and weakens America’s adversaries is not hypocritical.
It’s a smart strategy.
