What did Donald Trump do today?

He tried to sell his Venezuelan oil grab but left out the many reasons it won't ever lead to lower prices at the pump.

The Trump administration released some details of its supposed "deal" to secure access to Venezuela's 65 billion-barrel untapped oil reserves. Supposedly, the United States will form a joint partnership with an existing private Venezuelan oil company. That new joint company would have 100-year leases on various fields. Its profits would be shared with the Defense Department, and the State Department would have an option to buy a certain amount of oil at production cost. (When Trump isn't doing it himself, as he frequently does, he usually calls centralized state ownership and control of key industries like energy "communism.") 

Trump is painting this as a quick fix for the much larger oil price spike he's caused with his war on Iran. There are, to put it mildly, a few problems with this argument.

• The untapped Venezuelan reserves are just that—untapped. Nothing about putting a different name on the lease changes the fact that virtually all of those billions of gallons of oil will remain in the ground for decades, even if massive infrastructure is quickly built to extract it. 

• The massive infrastructure needed to extract it doesn't exist yet. Oil drilling infrastructure is incredibly complex, has to be carefully tailored to each new drill site, and costs an enormous amount of money to build even in areas near established power and road networks—which Venezuela's fields aren't. It's not impossible to build economically viable wells at the sites Trump has chosen to take, but it won't be easy or cheap either. That's why they haven't been exploited before now. 

•  Venezuelan oil is low-quality and not in high demand for gasoline. In oil industry terms, it's "sour," meaning it contains high sulfur levels, and "heavy," meaning it's sludgy in consistency and difficult to move via pipeline. It's mostly used for making asphalt or as the ultra-low-grade bunker fuel for ships. 

•  There isn't enough refinery capacity to use it. The one bit of good news for Trump's scheme is that the United States does have the highly specialized refineries that can make use of Venezuelan oil. They're 30 years old and in need of modern upgrades, which will cost a lot of money. But even fully modern refineries can only process so much, so even if Venezuelan oil eventually started flooding onto the US refinery market (after many years of building up the infrastructure to extract it), there still wouldn't be any place to refine it. To fix that problem, more US refineries would have to be built, and that would involve private businesses thinking it was worth the risk to spend the billions of dollars necessary. 

•  The political situation is much too unstable. For Trump's plan to come to fruition in the form of the first drop of "his" oil, both the United States and Venezuela would have to be in lockstep agreement for decades. Trump's direct control of the levers of American government isn't likely to survive the year, and his ability to coerce the acting President of Venezuela depends on her retaining power indefinitely too. Even routine legal challenges within Venezuela would add years more to the timeline, and that is assuming the mildest possible reaction from the multi-lateral outrage this "deal" is creating in Venezuela. 

•  Nothing stops a future Venezuelan government from re-nationalizing any oil infrastructure that American money and private investment builds now. Venezuela has already nationalized its oil production facilities twice, at first partially in 1976 and then a second time to seize the remaining facilities in 2007. The private companies involved were compensated, albeit less than they would have liked. Trump's claim that no American money would be spent on developing new infrastructure is obviously false—but that would make it much easier for the next government of Venezuela to claim that no harm would be done be taking back control of its own country's natural resources for a third time.

•  Every timeline gets longer if the price of oil drops. Right now, with oil at astronomically high prices due to Trump giving Iran a veto over a major shipping channel for it, Venezuelan oil makes economic sense. But there's no guarantee that will continue for the decades it will take to bring the reserves Trump claims online. A future US president will presumably be able to extricate the United States from Trump's quagmire in Iran, at which point oil prices will presumably fall, and that will make developing Venezuela's reserves cost-inefficient compared to lower-hanging fruit. That doesn't mean wells will never be drilled, but simple economics (which Trump claims to have studied at Penn) dictates that they won't be drilled while there are more profitable alternatives. 

•  Gasoline will never get cheaper in the United States because of this. In part that's because, as noted above, Venezuelan oil isn't really suited for gasoline or aviation fuel production. By the time it was profitable to extract gasoline directly from Venezuelan crude, the price would be so high that the global economy would probably have collapsed from an oil shock already.
  
  But it's also because oil is a globally traded commodity, and Venezuela's oil is still a drop in the bucket. Bringing more oil production online lowers prices for every market. That's why Trump's bungling of the Strait of Hormuz is raising prices even for countries that don't normally buy oil shipped through it: the laws of supply and demand are smoothed out in the global marketplace. More to the point, oil prices are set in large part by cartel action, and that routinely restricts output to keep prices high enough to be economically viable.
  
  

Trump clearly understands that his self-inflicted inflation is a major driver of his unpopularity, even among Americans who were strong supporters of his before he returned to office. It's less clear why he thinks that voters will confuse his announcement that prices are going down with the reality they face at the pump.

Why does this matter?

• American consumers are not nearly as stupid as Donald Trump thinks they are. 

• Bringing back 19th-century-style colonialism is bad; doing it for resources that are worthless without decades of development is stupid.