The Bankrupt Premise of Trump’s Venezuela Colony
The headline and opening paragraphs of a 1,400-word story basically reporting that Trump had sat for the interview Joe Biden had denied the NYT (okay, they didn’t mention the latter bit) focus on Trump’s plan to run Venezuela’s oil industry indefinitely.
Trump Says U.S. Oversight of Venezuela Could Last for Years
President Trump said on Wednesday evening that he expected the United States would be running Venezuela and extracting oil from its huge reserves for years, and insisted that the interim government of the country — all former loyalists to the now-imprisoned Nicolás Maduro — is “giving us everything that we feel is necessary.”
“Only time will tell,” he said, when asked how long the administration will demand direct oversight of the South American nation, with the hovering threat of American military action from an armada just off shore.
“We will rebuild it in a very profitable way,” Mr. Trump said during a nearly two-hour interview. “We’re going to be using oil, and we’re going to be taking oil. We’re getting oil prices down, and we’re going to be giving money to Venezuela, which they desperately need.”
[snip]
During the wide-ranging interview with The New York Times, Mr. Trump did not give a precise time range for how long the United States would remain Venezuela’s political overlord. Would it be three months? Six months? A year? Longer?
“I would say much longer,” the president replied.
That he said that is surely news. And while I assume David Sanger will do a follow-up story that might explain this, NYT did not here.
The headline gives Trump something he badly needs — false assurances to oil companies that have been disabusing Trump of his insane notions that oil will pay for a Venezuela invasion that the US would stick around to make investments worthwhile.
But it doesn’t get into all the problems with Trump’s rapidly moving attempt to turn this into a win: even with that much longer security guarantee, it’s not at all clear this will work.
It started 10 days before the invasion, when Trump told oil companies they had to invest now to get reimbursed for nationalizations in the past.
Administration officials have told oil executives in recent weeks that if they want compensation for their rigs, pipelines and other seized property, then they must be prepared to go back into Venezuela now and invest heavily in reviving its shattered petroleum industry, two people familiar with the administration’s outreach told POLITICO on Saturday. The outlook for Venezuela’s shattered oil infrastructure is one of the major questions following the U.S. military action that captured leader Nicolás Maduro.
But people in the industry said the administration’s message has left them still leery about the difficulty of rebuilding decayed oil fields in a country where it’s not even clear who will lead the country for the foreseeable future.
“They’re saying, ‘you gotta go in if you want to play and get reimbursed,’” said one industry official familiar with the conversations.
The offer has been on the table for the last 10 days, the person said. “But the infrastructure currently there is so dilapidated that no one at these companies can adequately assess what is needed to make it operable.”
Apparently, Trump didn’t heed these warnings, and in the aftermath of the invasion he has made grandiose promises that oil would pay for the invasion.
To be fair, his first announcement — that “the Interim Authorities in Venezuela” had agreed to give the United States (or perhaps Trump personally) between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil” which would “be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!” may well be an effort to pay for the costs of the invasion.
It’s not at all clear a $2 billion payment would even do that.
DOD has been conducting periodic murderboat strikes every several days, each of which surely costs millions of dollars.
One hellfire missile, for example, typically costs about $150,000, and reaper drones cost around $3,500 per hour to fly. An F-35 costs around $40,000 per hour to fly. The cost per flight hour of an AC-130J gunship is not public but its predecessor, the AC-130U, which was phased out in 2019, cost over $40,000 per hour to fly.
The Gerald Ford has been in the Caribbean since November 16, which works out to be about $424 million (though there were already ships there). One of the $50 million Chinooks used in the attack was badly damaged. Similarly, the Delta Force lead was seriously injured, so taxpayers are paying his recovery and possibly his retirement. There were 150 aircraft used in the attack.
It was a tremendously successful attack.
It wasn’t cheap.
But within days of promising that oil would pay for his new colony, outlets started reporting that taxpayers might have to subsidize that effort.
Donald Trump has suggested US taxpayers could reimburse energy companies for repairing Venezuelan infrastructure for extracting and shipping oil.
Trump acknowledged that “a lot of money” would need to be spent to increase oil production in Venezuela after US forces ousted its leader, Nicolás Maduro, but suggested his government could pay oil companies to do the work.
“A tremendous amount of money will have to be spent and the oil companies will spend it, and then they’ll get reimbursed by us or through revenue,” the president said.
The reasons why are clear: even assuming Venezuela remains stable long enough to develop investments (the promise Trump is floating to the NYT), the cost of refining Venezuelan oil is just too high, particularly given current prices.
The energy-intensive upgrading process also increases the carbon footprint of these heavy grades, which could push up costs further if more governments start taxing emissions or raising existing levies.
Breakeven costs for key grades in the Orinoco belt already average more than $80 a barrel, according to estimates by consultancy Wood Mackenzie. That places Venezuelan oil at the higher end of the global cost scale for new production. By comparison, heavy oil produced in Canada has an average breakeven cost of around $55 a barrel.
Exxon’s breakeven target for its global oil production by 2030 is $30 a barrel, driven by low-cost fields in Guyana and the U.S. Permian shale basin. Chevron has a similar target, while Conoco has a long-term plan to generate free cash flow even if oil prices fall to $35 a barrel. Oil , currently trades at around $60.
While energy boards have increasingly supported greater exploration in recent years, they are insisting that this be done with spending discipline in mind in the face of rising global supplies and uncertainty over the energy transition.
Here’s a table from Bloomberg that shows that Venezuela, even ignoring the potential instability, is just not a competitive investment.
The rest of the article explains what better alternatives the majors are investing in.
Trump seems not to understand this math (or he’s engaged in another con job), because he keeps bragging about the price of oil coming down which … yeah, that’s the point. That’s precisely why imagining you’re going to have willful takers for your offer to invest in expensive-to-refine Venezuelan oil at today’s prices is a pipe dream.
Thus the bribes … er, subsidies, that American taxpayers will end up paying. On top of any deployment, taxpayers will bribe oil companies.
So it doesn’t make sense for the oil companies.
But it also doesn’t make sense for Venezuelans, because the first thing Trump’s backers will demand is that Venezuela pay off years of debt.
Analysts estimate Venezuela now owes $150-$170 billion and JP Morgan calculates that $102 billion of that is in the form of bonds, while bilateral debt to China totals $13-$15 billion.
Venezuela has not reported debt figures for around a decade and state oil company Petroleos de Venezuela (PDVSA) has in the meantime struck complex oil-backed debt deals with China.Despite Washington’s ousting of Maduro, the main hurdles to a debt restructuring remain in place.
U.S. sanctions — including against Venezuela’s interim President Delcy Rodriguez – mean that even sitting down for creditor talks could breach U.S. Treasury Department curbs.
[snip]
“The U.S. administration has an interest in moving the restructuring forward, because without that restructuring, these oil companies will not be participating and will not be investing anything,” said Ed Al-Hussainy of Columbia Threadneedle Investments, which has Venezuelan bond exposure.
“The possibility of a U.S. government financial line of credit or a guarantee or a backstop of some sort is going to be music to the ears of investors,” the portfolio manager added.
Lee Robinson, founder of Altana Wealth which also holds Venezuelan bonds, said there was enough at stake for the U.S. itself to put a loan in place to kickstart Venezuela’s recovery.
JP Morgan said a recognition of Rodriguez’s new government by the Trump administration would open many questions.“Should the Fund be bypassed in favour of a faster-track, oil-based bilateral program, we could be going down the road of a faster-track, less orthodox bond restructuring than what we have seen in the years since the pandemic and the advent of the Common Framework,” JP Morgan said.
Sounds like the taxpayers will be on the hook for the debt restructuring, just like the bailout to keep “libertarian” Javier Milei in office.
Moe Tkacik has written a bunch on the extraction involved here, as in this November story on Juan Guaidó’s role in it, during the last time Trump tried to milk Venezuela, making it easier for Paul Singer to acquire CITGO.
On January 23, 2019, when Guaidó proclaimed himself the “interim president” of an incredulous Venezuela, Secretary of State Mike Pompeo announced that the Trump administration would recognize Guaidó as the Bolivarian Republic’s genuine leader, and unveiled a suite of tough new sanctions on PDVSA, pitched as a bid to force Maduro to step down. The whole thing seemed like a joke, a throwback to the days when our foreign-policy establishment insisted a drug-trafficking warlord on an island of six million was the “real” leader of the world’s most populous country—though at least most Chinese knew who Chiang Kai-shek was when he fled to Taiwan in 1949 to preside over what the United Nations insisted on calling the “Republic of China.” Only the Miami Herald noted an unusual provision of the new arrangement, explained by then-Treasury Secretary Steve Mnuchin, who told the newspaper “that if Guaidó succeeds in forming a government, the money” from international sales of Venezuelan oil that he was freezing under the new sanctions regime “would go to him.” On Twitter, Guaidó promised this new arrangement would “prevent the looting from continuing.”
[snip]
Venezuela, PDVSA, and Citgo were legally separate entities. But in mid-February, Guaidó named entirely new slates of board members to PDVSA, its U.S. holding company, and Citgo, a move Rodríguez knew would strengthen Crystallex’s case. That same week, the glass manufacturer Owens-Illinois, which had been awarded a half-billion-dollar arbitration judgment over two Coke bottle factories Chávez had expropriated in 2010, sued Citgo on the basis that it was an “alter ego” of the state. Owens-Illinois had expert witness assistance from none other than José Ignacio Hernández, whom Guaidó had just named the attorney general of the shadow government.
That is, Trump proposes to fix the problem he, in significant part, caused in his first term.
Plus, until you fix Venezuela’s corruption problem — which Trump has pointedly declined to do in retaining Delcy Rodríguez, partly because he’s relying on Maduro’s suppression regime to offer stability to oil companies, partly because he affirmatively loves corruption — then the Venezuelan people aren’t going to see anything, even while Trump is attempting to oust China’s slightly more favorable float.
And all this is happening on a time frame — big investments and risks on the front end, very long timetable for returns to anyone — that I imagine China is taking some solace about being surprised, if it was surprised, by looking at how Trump’s obsession with becoming a petro-autocrat leaves it untouched to dominate renewables for the foreseeable future, renewables that will continue to put pressure on oil prices in a way that Trump seems not to understand.
And all that assumes Trump, or Dalcy Rodríguez, can ensure stability, something for which there’s no evidence. All that assumes that no one decides to make a target of the resources Trump has put in the middle of an increasingly volatile Caribbean.
Trump is literally making up Colonialism 2.0 on the fly. And the serially bankrupt businessman appears to be doing funny math at every turn.
So yeah, Trump is making expansive claims to the NYT. But they are part of an elaborate con job to prevent this Venezuela adventure from backfiring in a spectacular way.
This has all the hallmarks of a Trump Deal, making promises to force the numbers to line up. I would wonder who is going to provide security for all those oil people rebuilding infrastructure. Maybe the cost is peanuts in the big picture, but it ought to be on their minds, along with 2029.
I believe more than ever that the last decent human being to be US President was Jimmy Carter. And look what the establishment did to him and his presidency.
Beg to differ: for hos many flaws, Obama is a decent human.
Definitely! But if you want to see something interesting about Carter, take a look at my comment on the previous post.
saw it just now, thx
If you want to get a deeper sense of Jimmy Carter, read the dedication he wrote for his book of poems, Always a Reckoning. Some of the poems are pretty good too.
The documentary Jimmy Carter: Rock & Roll President is quite good. I watched it on a long flight home the day news of his death broke.
One can imagine how the oil execs likely reacted when Donald J. Trump – of all people, he of the multitudinous fabrications and lies – told them, “If you invest your money in Venezuela today, surely you will be reap many profits tomorrow”.
“If you invest your money in Venezuela today, surely you will be reap many profits tomorrow”.
His investment shakedown pitch is almost a literal quote from the Hamburgeler.
Another driver for this from trump’s perspective is likely that he wants that ’30-50B barrels of oil/$2B’ as the first tranche of a slush fund that he would directly control.
He’s been trying to do this with tariff receipts, but not all that successfully, since it doesn’t at all work like that and the laws are clear, but plugging in a non-domestic source of funds would presumably bypass the usual checks on this sort of corruption.
Trump referred to 30-50 *millions* (not billions) of barrels of oil.
FWIW, Someone who seemed to know this stuff said night before last that 30 to 50 million barrels is really not that much oil–about three days’ worth of US production. This may be yet one more case where Trump’s brain, such as it is anymore, just shorts out at the mention of a word ending in “illions.”
Scott Bessent will need to find a way to channel that money into the Office of the President instead of the US Treasury, and Trump, of course, is already framing the dialog to that end, just taking it as a given, lol. Prolly Mike Johnson will be A-OK with the whole deal.
Trump also said that he wants to drill enough Venezuelan oil to bring the price of oil in the US down to $50/barrel. How precisely he intends to get private enterprise to do that when Venezuelan oil costs $80/barrel to extract is a bit of a mystery. Cold economic reality will strike as soon as he’s sold off all of the oil in tankers and other storage. He also said that Venezuelans would have to buy American goods with the money that he’s keeping “for their benefit.” Venezuela is about to get a whole lot poorer.
Trump’s oil-ligarch sponsors want oil above $65/bbl. $65/bbl has been the average threshhold breakeven for oil production (WTI) including pipeline operations. Lower than that price and oil isn’t profitable at all.
If Trump really wanted to force the price of oil to drop to $50, he’d apply a basic understanding of supply and demand by throttling demand — investing in alternative energy and increased efficiency in consumption, specifically investing in solar energy as it has become the cheapest source. But notice how Trump has absolutely avoided any discussion of improved energy efficiency (a cheap approach) let alone alternative energy development. He’s operating according to his sponsors’ desires which is to seize and limit marketshare of oil in order to boost oil prices while he lies to the public about improved prices.
He has to lie to the public about this because honesty would guarantee a bloodbath at the polls. If oil prices and subsequent gasoline prices go up before the mid-terms, his party will be hammered (as if they aren’t going to be anyhow).
Here’s a thought experiment: Reduce the production cost of Venezuelan oil to $0, and set the market price to $50. Assume all that goes to Venezuelans. Further assume that production rises back to 3 million/bbl/day.
That works out to $5/day per Venezuelan. Which would be better than what they’ve got today but would still rank them just above Nigeria in the world scorecard.
How many barrels of oil fit into the bathrooms at Mar-a-Lago?
He’s so full of himself
Thank you for the link to the prospect piece, fascinating backstory to the Crystallex litigation, which has been ongoing for some time.
If the US controls those accounts, the US is responsible for everything that happens to those accounts. I wouldn’t trust the US government with that money.
I butchered the blockquotes above, should read like this:
https://reason.com/2026/01/08/trumps-plan-for-30-million-barrels-of-venezuelan-oil-doesnt-add-up/
https://www.reuters.com/business/energy/money-sale-venezuelan-oil-be-held-us-controlled-bank-accounts-energy-dept-says-2026-01-07/
Like Iran-Contra, I wouldn’t be surprised if that creates a slush fund that can be diverted to fund secret wars or some other interest of the Trump regime.
In response to “murderboat strikes every several days, each of which surely costs millions of dollars,” today BNN reports “Shares of defense stocks are rising after U.S. President Trump said he is planning to request an increase in the military budget. U.S. stocks like Lockheed Martin and Northrop Grumman have been given a boost, along with European defense shares. The proposed increase was announced by the President on social media and proposes a US$1.5 trillion defense budget for 2027.”
Unless I’m brain dead, that’s about a 50% increase to current out of control levels.
https://data.worldbank.org/indicator/MS.MIL.XPND.CD?locations=US
Sounds about right if you’re going to create an actual, modern, small-b-brobdinagian empire — on a budget.
From BNN: Exxon says lower oil prices reduced fourth-quarter results by $800 million to $1.2 billion, one of the first signs that Big Oil is facing a tough earnings season. Exxon is the first of the oil supermajors to report quarterly guidance just weeks before the reporting season is scheduled to kick off. The international crude benchmark last year posted its worst annual performance in half a decade amid a looming global oversupply of crude. The price slump prices come as U.S. President Donald Trump urges Exxon, along with rivals Chevron and ConocoPhillips, to invest billions of dollars to revive the Venezuelan oil industry after the ouster of President Nicolas Maduro this past weekend.
As you know, major companies have entire departments that analyze investment opportunities by country, service or industry, product type, etc. So do major banks, which make a living financing such investments. Trump, naturally, appears to have assessed none of that, and seems to be ignoring or inventing the information which argues against his demands. Businessman president? LOL.
The government of the US probably had more of the resources you mention than any company or bank in the world, until noon Jan 20, 2025.
The USG resources have a different focus. They aren’t concerned with an individual firm’s risks or the forecasted profitability of an individual investment.
Discouraging events. I am convinced that Trump is incapable of conceptualizing the national interest; all he can see is his own interest, and he imagines that to be the same as the national interest. So offshoring the proceeds he imagines will be paid positions him to dole it out. The perfect plan for homage to be paid.
Off topics only slightly, I am glad to see that thetrace.org is tracking shootings by ICE.
Many thanks for the sustained analysis and examination of current events at this site. The work is very much appreciated.
Looking at Trump’s historical practices, this is all one more corrupt, thug game to him. His occupation seems to be to grab money under very questionable circumstances and manners, regardless of anything else including the deep harm to others.
I have a very bad feeling the U.S. is headed like the rest of Trump’s past ventures — bankruptcy, but even worse. To me, no other visual symbol for his depravity is more telling than when he (two times) went to Fort Knox and openly salivated at the gold stored there. I believe he is planning to “disappear” that gold. Maybe he has already done so.
‘I imagine China is taking some solace about being surprised, if it was surprised, by looking at how Trump’s obsession with becoming a petro-autocrat leaves it untouched to dominate renewables for the foreseeable future, renewables that will continue to put pressure on oil prices in a way that Trump seems not to understand.’
There is a long documentary record proving that Trump is a shit businessman so nobody should be surprised that he’s obsessed with one dying technology which might kill us all (fossil fuels) whilst also being obsessed with a shiny new one which might kill us all (AI). And he’s trying to use the former to fuel the latter. Just stoopid.
Trump apparently thinks that everything was better in the past. In his case, it seems to be a past that was before he was even born. Which I think fits with Goddard and Newman’s ‘neo-royalist’ theory of Trump’s aims as having nothing to do with national interest or spheres of influence but, rather, being all about the personal interests of Trump and (as some people have suggested here before) his courtiers:
https://www.politico.com/news/magazine/2026/01/07/venezuela-royalism-donald-trump-00713276
Hopefully not too off-topic, but re “royalty” — Have you noticed when Trump appears to do Mussolini impressions, standing tall with his nose pointed upward and mouth closed tight in a mean-look.
The local PBS channel recently aired a Rick Steves (i.e., the travel guy) series on fascism (“The Story of Fascism in European”). What an unexpected and excellent series. I took note of the Mussolini clips.
I think he does that because it minimizes his wattle (his only visible neck section).
” It was a tremendously successful attack. ” Respectfully debatable, as opposed to what, no attack, or a diplomatic solution. It could have been a lot worse. The Mad King’s attack logic shifts with schizophrenic clarity. The possibility exists, the attack was caused by Maduro’s refusal to invest in Trump’s crypto scheme/scam
So when Trump claims he spoke to all the oil companies, did he mean he just had his staff hint that they should get in while the getting was good and took that as a green light because he assumed they’re as greedy for oil as he is about gold and would rush to grab it?
Say what you will about Trump, he’s a salesman who understands how to get people to buy what he’s selling if they don’t know any better. Sadly for him, the sort of manipulation tactics that work on late-night informercials ain’t gonna work with oil execs who understand numbers.
I agree wholeheartedly with the salesman part. Let’s remember a fundamental aspect of Trump: his business acumen led to numerous bankruptcies over the years. Here’s another fundamental aspect of business Trump is familiar with: bankruptcy allows you to walk away from your problem.
Venezuela is just a page torn from a decades old Trump business playbook. When it fails you can tell him all about on the golf course.
Here’s a fun article to read.
“Inside the Silicon Valley Plot to Annex Venezuela for Oil That America Can’t Afford
Donald Trump’s decapitation of the Venezuelan Government opens the door to his Big Tech oligarch supporters’ dreams of creating an anti-democratic ‘Network State’ in the country, reports Nafeez Ahmed”
https://bylinetimes.com/2026/01/07/inside-the-dystopian-silicon-valley-plot-to-annex-venezuela-for-oil-that-america-cant-afford/
These people probably got turned on watching The Purge and the “New Founding Fathers”.
Thanks, zscore. I’ve read other interesting articles from the Byline Times, too. This one is very informative.
Definitely going to give me literal nightmares.
What unites those countries Trump purports to intervene in are the technobros. They have expressed their desire to create their free-from-government network states in Venezuela, Greenland, Nigeria, while holding on to Próspera in Honduras (which may have played a role in the pardon Of Juan Orlando Hernández). It’s a project of Vance’s pals Peter Thiel and Marc Andreessen among others. At Bluesky, @jennycohn is keeping track.
Jenny Cohn does great work, often going deep into the weeds.
The Hondurans who live near Prospera aren’t happy – they’re not benefiting.
Yes, interesting. There are so many facets it seems. Thanks for link.
The Senate voted 52-47 with five GOP crossing the aisle (including Hawley!) to restrict the administration war powers on Venezuela. I would suspect the House will follow suit with more party defections, because there are several GOP House members not willing to play ball any longer. It will get vetoed, of course but it’s worth forcing the issue to get Convict-1 on the record.
It seems the last straw was when Convict-1 said he’d be ‘running’ Venezuela using the oil stolen (it’s called ‘gifting’ now) and no one with a brain believes that boots on the ground would not be required to do that.
Not only is American Colonialism 2.0 back, so is Quantitative Easing 2.0:
Trump says he wants government to buy $200B in mortgage bonds in a push to bring down mortgage rates [AP]
https://www.seattletimes.com/business/trump-says-he-wants-government-to-buy-200b-in-mortgage-bonds-in-a-push-to-bring-down-mortgage-rates/
I’m so old that I remember from 3 months ago when
Scott Bessent grilled Fed chair candidates on rates and quantitative easing [FT]
https://www.ft.com/content/68755ca1-48f9-49e2-ab54-a1b35edf6e9c
“But within days of promising that oil would pay for his new colony, outlets started reporting that taxpayers might have to subsidize that effort.”
People are acting like this is on the legit. Taxpayers will pay the costs of the upgrades, then Trump Corporation and big oil will get the proceeds.
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It occurs to me that though Trump may have been convinced to go after Venezuela for oil and glory Rubio and Miller might have different reasons. Miller of course is looking to dispatch all Venezuelans from US soil. Rubio appears to be looking for some means to decapitate Cuba, the fevered dream of his exile Florida community. Whispering in the deranged man’s ear, each achieve their goals.
The Felon Guy is now saying that what he does depends on his own morality. Or so he told NYT.
The problem seems to be that his morality is that of a toddler, if it exists at all.