{"id":661624,"date":"2026-09-02T02:35:00","date_gmt":"2026-09-02T02:35:00","guid":{"rendered":"https:\/\/buglecall.org\/?p=661624"},"modified":"2026-09-02T02:35:00","modified_gmt":"2026-09-02T02:35:00","slug":"feedstock-is-not-fuel-why-venezuelan-crude-is-no-near-term-fix-2","status":"publish","type":"post","link":"https:\/\/buglecall.org\/?p=661624","title":{"rendered":"Feedstock Is Not Fuel: Why Venezuelan Crude Is No Near-Term Fix"},"content":{"rendered":"

Feedstock Is Not Fuel: Why Venezuelan Crude Is No Near-Term Fix<\/span><\/p>\n

\n

Authored by former CIA officer Larry Johnson<\/em><\/a><\/p>\n

My friend, Karl Miller, is out with a great piece that exposes Trump\u2019s claims about Venezuelan oil as a massive case of gaslighting. I am summarizing his piece, which is titled,\u201cVenezuela Oil: The Physical Barrel and the Capital Bill,\u201d because it is not publicly available via a link.<\/em><\/p>\n

On August 27 2026, President Trump announced what he called the biggest oil deal in world history \u2014 a US-Venezuela agreement giving the United States majority control of more than 65 billion barrels of Venezuelan reserves, which he said would \u201csubstantially lower Gas Prices for all Americans.\u201d<\/strong> The pitch landed with gasoline near $4.09 a gallon, about 27% higher than a year earlier and on track for the most expensive August on record, as a six-month Iran war and the Hormuz disruption kept a fifth of world supply under strain \u2014 and with the midterms two months away<\/strong>.<\/p>\n

Independent analysts noted the arithmetic fails on that timeline: the 30 to 50 million barrels Trump floated is less than half a day of global consumption, the 65 billion is an in-ground estimate rather than available supply, and any price effect would take years<\/strong>. Miller\u2019s briefing goes underneath that objection to the more fundamental one: Venezuelan crude is the wrong substance to fix the shortage Americans feel at the pump<\/strong>. It is not a magical fix<\/strong>. In the near term it is not a fix at all.<\/p>\n

The point most likely to be missed<\/h2>\n

The shortage that bites right now is in product \u2014 diesel and jet fuel \u2014 and extra-heavy Venezuelan crude is not produc<\/strong>t. It is refinery feedstock. You cannot relieve a middle-distillate shortage with a barrel that still has to be diluted, blended, upgraded, coked, and hydroprocessed before it yields a usable gallon of anything<\/strong>.<\/p>\n

<\/a><\/p>\n

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via Reuters<\/em><\/figcaption><\/figure>\n

<\/p>\n

This is why the \u201cturn Venezuela on\u201d reflex fails on its own terms. Even setting aside whether Caracas can produce more, the barrels that already exist do not add supply where the market is tight. Prompt US cargoes would largely be diverted from Venezuela\u2019s current buyers \u2014 China, India, Europe \u2014 not created on top of global production<\/strong>. That reshuffles refinery slates and trade routes; it does not repair a physical shortage. A barrel moved from a Chinese refiner to a US one is a change of address, not a new barrel, and certainly not a new gallon of jet fuel.<\/p>\n

Why the feedstock gap is binding<\/h2>\n

The nature of the crude is the reason. Roughly three-quarters of Venezuelan production through 2028 is expected to be heavy, extra-heavy, or bitumen, with the Orinoco Belt supplying about 60%. That material is the raw input at the very front of the conversion process; the finished distillate barrel sits many capital-intensive steps downstream <\/strong>\u2014 coking and hydroprocessing capacity, hydrogen, refinery uptime, yields, distribution \u2014 none of which a cargo of Merey crude supplies.<\/p>\n

The price tells the same story: Merey 16 averaged $67.36\/bbl in July 2026, about $12.35 under the OPEC basket, the market pricing in the cost of converting this crude into something useful. Venezuela cannot repair a current crude or middle-distillate shortage, because the missing piece was never the crude.<\/p>\n

The supply side only reinforces it<\/h2>\n

Nor can the volume be conjured quickly. July 2026 output was near 1.1 million b\/d \u2014 about a third of the 3.4 million b\/d peak of 1998 \u2014 and the system that would lift it has been hollowed out: the EIA documents pipelines over 50 years old, power outages, constrained diluent, and impaired refineries, with PDVSA estimating some $8 billion for pipelines alone. Rystad puts full-cycle breakevens at $70\u2013$80\/bbl or higher and its base case adds only about 194,000 b\/d through 4Q 2028; a return toward 3 million b\/d would take well over $150 billion across 10\u201315 years.<\/p>\n

Large in-ground reserves, Miller stresses, are not deliverable supply<\/strong> \u2014 and the 65 billion barrels in the President\u2019s announcement is exactly that kind of number: a resource estimate, not a delivery schedule<\/strong>.<\/p>\n

The revealed preference: what the majors already told the White House<\/h2>\n

The strongest confirmation is not a model but the behavior of the companies that would have to fund the rebuild. At the White House on January 9 2026, shortly after the US removal of Maduro, Trump insisted the industry would spend more than $100 billion to rebuild Venezuela\u2019s oil sector. The room did not agree. ExxonMobil\u2019s Darren Woods told the President to his face that Venezuela is, as it stands, \u201cuninvestable\u201d \u2014 that durable legal frameworks, commercial terms, and stability must come first<\/strong>, and that Exxon would send only a technical team to assess. ConocoPhillips\u2019 Ryan Lance said the system needs major restructuring first; both firms had their assets expropriated under Ch\u00e1vez, and by 30 January both Exxon and Chevron said they had no plans to raise Venezuela spending that year. The figures put before that meeting matched Miller\u2019s: Rystad estimated roughly $110 billion merely to double output by 2030, and closer to $185 billion to climb back toward 2000-era levels.<\/p>\n

Also, Paul Saladino: “We have to deal with all the issues of collapsed infrastructure and a failed state<\/strong>.”<\/em><\/p>\n

\n

We absolutely under no circumstances will be refilling the SPR with Venezuelan crude.<\/p>\n

It\u2019s the heaviest, most sour oil on earth. We tried to inject very heavy oil into the SPR once in the 80s. It was an epic disaster, broke the system, and has to be removed. And that was Mexican\u2026<\/p>\n

\u2014 Paul Saladino (@PaulSaladino7) August 31, 2026<\/a><\/p><\/blockquote>\n

The one enthusiast underscores the point. Chevron \u2014 the sole US major already producing there, at nearly 250,000 b\/d under a special license \u2014 says it could raise flows about 50% in under two years, but even that lifts Venezuela\u2019s total only to just above 1.1 million b\/d, against a peak near 4 million<\/strong>. Smaller entrants like Hunt Oil and SLB signed the first fresh PDVSA deals in August, but the supermajors best equipped to finance a rebuild are, on the record, declining to write the checks. When the people holding the capital call a resource uninvestable, it is not a near-term supply solution.<\/p>\n

Venezuela is a long-duration heavy-crude redevelopment option, not an emergency supply source \u2014 and specifically not a fuel solution. Existing cargoes can be rerouted, but that changes trade maps without adding a net barrel or a finished gallon; meaningful new production is years and well over a hundred billion dollars away, and the firms who would fund it have said so out loud. Whatever the \u201cbiggest oil deal in world history\u201d is worth over a decade, it will not lower the price of diesel or jet fuel this year. The distillate shortage will not be solved in Caracas.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 09\/01\/2026 – 22:35<\/span><\/p>","protected":false},"excerpt":{"rendered":"

Feedstock Is Not Fuel: Why Venezuelan Crude Is No Near-Term Fix Authored by former CIA officer Larry Johnson My friend, Karl Miller, is out with a great piece that exposes Trump\u2019s claims about Venezuelan oil as a massive case of gaslighting. I am summarizing his piece, which is titled,\u201cVenezuela Oil: The Physical Barrel and the… Continue reading Feedstock Is Not Fuel: Why Venezuelan Crude Is No Near-Term Fix<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":661619,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[18,19,10,21,12,11,9],"tags":[],"class_list":["post-661624","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cancel-culture","category-censorship","category-civil-liberties","category-election-integrity","category-equal-justice","category-free-speech","category-religious-freedom","entry"],"_links":{"self":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts\/661624","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=661624"}],"version-history":[{"count":0,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts\/661624\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/media\/661619"}],"wp:attachment":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=661624"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=661624"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=661624"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}