As the United State’s economic turmoil has subsided in recent months, President Joe Biden has seen some good press about his allegedly strong economic policy. A quick look at the oil and gas industry over the past three years, however, would show how squishy those claims really are. A more likely explanation for the relief our economy is experiencing would be the recently established flow of oil from Venezuela into the U.S. energy market—and given the broken state of Venezuela’s oil industry, these improvements won’t last long.
President Biden has always taken a progressive approach to the economy, expanding the government’s economic involvement from “pro-climate” tax reforms to government spending projects like the $1 trillion infrastructure bill. But the one policy that opened the pandora’s box of the U.S. economy was the canceling of the Keystone Pipeline.
By themselves, the first two decisions would probably have had a minimal effect on the economy. But when you add a gas shortage to a weakened economy that has already sustained a huge injection to the money supply, you get something like what the Biden administration will be forever remembered by: the worst rate of inflation in the last 40 years.
The Keystone pipeline would have provided a constant and cheap supply of sulfur rich crude oil from Canada into the refineries of the United States in Texas, cutting transport and extraction costs without leaving the US defenseless against changes in international crude prices.
But that’s now how fate would have it. Just after the Biden administration implemented these new environmental policies, canceling the pipeline, the Russian Federation attacked Ukraine, bringing international crude prices up and driving the US inflation to an all-time high.
As the U.S. imposed import restrictions on Russian oil and many western allies joined them in doing so, the international demand increased due to the lack of a main supplier. As other suppliers such as OPEC countries received more buy orders for the same level of production, prices had to go up.
After several years of economic turmoil, the only alternative the administration had to contain the oil price hikes was to find new suppliers—hence Biden’s current situation with Venezuela.
While Venezuela has one of the biggest oil reserves in the world, its production output is not as high as other oil producing countries. There are two reasons for this: 1) the U.S. imposed sanctions on the economic apparatus of the country, including the oil industry, due to the Venezuelan dictator’s authoritarian policies and human rights violations and 2) that same dictatorship has made Venezuela unreliable as a supplier.
In a desperate effort to get a handle on gas prices, President Biden has had to radically change his foreign policy efforts towards Venezuela. Earlier this year, Biden decided to allow U.S. companies like Chevron to import Venezuelan oil to supply the American pumps, and as a good faith act, the United States even exchanged the two nephews of dictator Nicolas Maduro—held in the U.S. as they were caught on a plane trafficking coke—for two American citizens. While these efforts have lowered oil prices and helped to ease inflation for now, this new partnership with Venezuela cannot end well.
Venezuela is not a reliable partner. As a country in constant fights with the United States, economically ravaged by their socialist policies, and heavily sanctioned due to the human rights violations they commit, the nation is not someone we want to be dependent on. Due to its own damaged oil industry, Venezuela does not have the means to be a long-term provider for the United States. As soon as the deficiencies of Venezuelan production show again, the supply of oil will decrease greatly.
Perhaps even more likely is that upcoming elections in Venezuela will wreck tenuous new ties with the United States. Already the Venezuelan dictatorship has been hinting about efforts to hinder the ability of Venezuelans to democratically elect a leader and has been mobilizing to persecute candidates. This is a violation of the negotiations that allowed the United States to remove the sanctions imposed by the Trump administration, and most likely will be reimposed, halting completely the oil supply from the Latin American country.
In the end, President Biden’s momentary solution to the U.S. inflation crisis might lead to no long-term economic benefits, but it may contribute heavily to setbacks in American interests in the region. Nevertheless, we will continue hearing from the media about the success of Bidenomics, the end of the gas crisis, and that things will go back to normal due to the leadership of the President. If only it were true.
Erik Suarez is the Executive Director of Youth & Democracy in the Americas and a contributor for Young Voices.
