Venezuela Oil Deal May Take Years to Benefit US Consumers

The United States and Venezuela have reached an agreement to give the U.S. a key role in Venezuela's oil industry, but it may take years for this deal to benefit American consumers. The agreement allows the U.S. to secure billions of barrels of Venezuelan oil at favorable prices, but experts say it will not lower domestic gasoline prices anytime soon.

According to Severin Borenstein, a University of California-Berkeley business administration and public policy professor, Venezuela's oil production will need significant infrastructure investments in the next four to ten years. These investments are estimated to be $100 billion, which will likely take years to materialize.

The agreement gives the U.S. government a 35% ownership stake in the new entity, North American Blue Energy Partners, headed by Venezuelan businessman Alejandro Betancourt. The company has 17 Venezuelan oil fields with 65 billion barrels of proven reserves and will have a guaranteed right to buy 20% of the oil produced without a price markup.

Experts caution that companies may be hesitant to invest in Venezuela due to past behavior from Venezuelan governments, including nationalizing the oil industry in 2007. However, some experts believe this deal could be a 'paradigm shift' for the global oil market over the medium- to longer-term.