Venezuela: A Key to Future US Energy Security

Abstract

US energy and national security in the long term is not about renewable energy, domestic oil production or so-called “energy independence” pipedreams. It is more about the price of crude oil. By 2020 the US will import less than 40% of its total supply of oil, a significant drop from 43% in 2012, thanks to increased domestic production of crude and other liquids particularly tight/shale oil. There is little change though to the global oil supply and demand balance, which means it will hardly impact on prices. Therefore, the best to hope for is for increased energy security. The United States needs more oil, especially from outside the Middle East region, in order to maintain a sustainable oil price. It is an economic and geopolitical imperative. How much? A sustainable oil price range for both consumers and producers is around $100-$130 a barrel. The lower range is realistic because it is currently the benchmark set by Saudi Arabia and other Arab Gulf oil producers. But geopolitical instability in the Middle East is increasingly threatening the world’s ability to produce oil at sustainable prices. That is why Venezuela could prove to be the best placed in the world to significantly improve US oil and national security in the long term. It has the largest proven crude oil reserves in the world and is badly in need of huge investments and advanced oil technology to significantly raise its oil production. However, few believe Venezuela could attract the investments needed without some rapprochement with the United States. This requires a new approach by the United States towards Venezuela.

Keywords: energy security, price, reserves, energy independence, tight oil