The Venezuela operation is a win for America. Consumers and businesses will benefit from lower prices, while oil companies will have a chance to earn higher profits. It also simultaneously supports American national security while undermining our greatest rival, China. But the biggest loser of all is Canada.
Western Canada sends over four million barrels a day of heavy crude to American refiners that are equipped to handle this type of oil. But now, with access to the massive flows of Venezuelan crude, which is similar to the Canadian flavor, the US no longer needs to rely on Canada to keep the refineries on the Gulf of America running at full capacity.
Instead, the oil shipments that previously went to China can now be redirected to American refiners, and don’t be surprised if the black gold comes in at a discount. After all, President Trump said the US will be running Venezuela, and that includes the oil industry.
Since energy security is national security, access to ample, reliable flows of oil represents a key strategic interest. Removing one such flow from the Chinese sphere of influence and bringing it into our own is tremendous progress toward this goal.
It’s also a massive win for American families and businesses who will benefit from lower prices, courtesy of more energy supplies. And since energy affects the price of everything else in an economy, lower prices for products like gasoline will put downward pressure on countless other prices, providing relief after four years of inflation under the Biden administration.
American control of Venezuela is also a second chance for jilted US oil companies to again profit from nearly one-fifth of the world’s proven oil reserves.
Years ago, those American companies poured investment into Venezuela to essentially modernize the entire industry there. For their troubles, these oil firms had their physical property confiscated and their intellectual property copied as the communists “nationalized” Venezuelan oil.
Of course, communist rule there was a disaster, as it has been everywhere, and the oil industry languished as infrastructure decayed, investment lagged, and production fell well below its potential. But this is poised to reverse.
Venezuela will now assuredly receive billions of dollars of investment from American oil companies, many of whom are champing at the bit to regain access to the largest reserves in the world. That will mean a windfall of jobs and income for the Venezuelan people, all of which could have been Canada’s.
But instead of welcoming such investment and building valuable infrastructure like pipelines, Canada has preferred to prioritize far-left causes and an anti-energy agenda.
After last weekend’s events, not only is Canada losing its biggest crude customer, but it’s also losing its only real leverage in trade talks with the United States. This is an economic reality that few professional pundits seem to have grasped.
To be clear, the flood of cheap Venezuelan crude will not arrive in the US overnight. It will take time to rebuild Venezuela’s oil infrastructure and really ramp up production to replace most Canadian crude imports. But the US, for a change, is firmly in the driver’s seat and master of its own destiny—and hemisphere.
The economic story here also goes well beyond oil. Venezuela is a veritable goldmine of other natural resources like rare earth minerals, lumber, bauxite (the primary source of aluminum), natural gas, and more. Canada just lost not only its leverage with oil, but just about every other one of its exports too.
President Donald Trump has effectively barred the door on Canada, and the latter will have few alternatives to completely opening every one of its markets to free and fair competition.
If the Monroe Doctrine warned Europeans to stay out of the Western Hemisphere and the Roosevelt Corollary established American intervention therein, then the Trump Corollary has put a finer, economic point on the matter that’s best summed up in two words: America first.
E.J. Antoni, Ph.D., is chief economist at the Heritage Foundation and a senior fellow at Unleash Prosperity.
Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.
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