Sludge

Donald Trump is at war with the rest of the world.

Since the start of his second term, he threw the global economy into turmoil with his whimsical tariffs. He withdrew US contributions to important international organizations, including the World Health Organization. He scuttled USAID and basically questions NATO’s reason for being. He pulled his country out of the international effort to curb global warming.

The man has taken other nations’ sovereignty lightly. He sent bombers into Iran. He thinks Gaza is nothing more than a real estate proposition. He wants to annex Greenland and convert Canada into the 51st state. Last week, he assaulted Venezuela, took the dictator Nicolas Maduro prisoner and threatens to do the same with Colombia’s leader.

Trump is now the personification of the Ugly American: unapologetically imperialist and quick to pull the trigger on any country that annoys him. Although he claims he deserves to be awarded the Nobel Peace Prize, he embarks on a path of intimidation and war.

The US Supreme Court, dominated by his partisans, has bent backwards to allow his brazen policies. He unleashed immigrations thugs on his own people, sparking protests nationwide two days ago after trigger-happy ICE agents shot dead a young mother in Minneapolis.

The US Congress lost its spine and many Republican politicians are choosing to retire instead of confronting Trump’s unrestrained rule. The blowback to Trump’s brand of strongman rule could spell disaster for the Republican Party in the next elections.

Trump could not possibly get all he wants all the time. In a few weeks, the US Supreme Court is due to come out with a potentially devastating ruling on the constitutionality of Trump’s tariffs. The US Congress will begin a review of the legality of Trump’s actions in Venezuela.

Maduro may be in jail but the dramatic raid that led to his capture may be a turning point in Trump’s frenzied effort to rule without guardrails. The military operation mounted by US forces may be a textbook case in precision. But the whole effort appears to lack in well thought-out strategy.

In Trump’s mind, all that mattered is to get Maduro out of the picture and then cut a deal with remnants of his ruinous regime to give the US access to Venezuela’s vast oil reserves. Trump declared he would “run” the country and get paid in oil. He even revealed that the pro-Maduro regime in Caracas was ready to hand over 50 million barrels of oil – the proceeds of which Trump will personally supervise.

There are two reasons why Venezuela, despite having larger confirmed reserves than Saudi Arabia, has become a struggling economy abandoned by the best and the brightest of its people.

First, the populist regimes of Chavez and Maduro nationalized the oil industry and therefore lost the opportunity to modernize the potential source of national wealth. Venezuela’s oil sector is in ruins. Its technology backward. Its output far below potential.

Second, Venezuela’s oil is composed of heavy sour crude similar to those recovered from tar pits. It is expensive to pump out of the ground and even more expensive to refine into usable fuels. Extraction and refining of what is basically sludge will be costly to the planet.

In a word, Venezuela’s oil may be abundant but it can never be cheap. Given the looming global oil surplus, it might not even make sense to invest in modernizing the cursed country’s oil sector.

Trump thought he might just grab whatever supplies Venezuela had in storage and then order his oil cronies to invest in producing more of the commodity. This is characteristic of Trump’s simplistic grasp of everything.

To begin with, it will require tens of billions of dollars in new investments and at least a decade to bring Venezuela’s oil production up to some economic scale. America’s oil giants are reluctant to make those investments in what is really a sunset industry. They fear the political turbulence that Venezuela is heir to. They want better guarantees than what Trump could possibly offer.

So there: Venezuela’s oil is not about to be flowing generously to flood the market and push prices down. The cost of extracting and refining thick and viscous sludge sets a basic price for the commodity that the global market may not be willing to pay.

Trump’s delusion of bringing pump prices to below $2 per gallon will never happen. All the other oil producers will do is to increase available supplies until crude prices fall just slightly below Venezuela’s cost of production. That will put the cursed country’s much vaunted oil reserves back to sleep.

As things stand, it is much cheaper to exploit light and sweet crude from the Arctic than to attempt to scale up Venezuela’s heavy and sour crude. This is why the oil majors are not dancing to Trump’s tune.

Instead of substantially increasing the US’s oil supplies, the raid to capture Maduro may have only saddled Washington with the new costs of nation-building in the reestablished client state.

Trump loudly declared that the US will be “in charge” in Venezuela. But what exactly does that mean?

The capture and imprisonment of Maduro will not alter the deep polarization of Venezuelan politics. The country remains constantly on the brink of civil war – even as the anti-Maduro forces vainly try to flatter the American tyrant.