Oil, Power, and Venezuela: How One Resource Shaped a Nation
Venezuela sits at the top of South America, close to the Caribbean Sea and the United States. Long before most people outside the region paid attention to Venezuela, something beneath its land made it powerful: oil.
Venezuela has some of the largest oil reserves in the world. Because oil is used to power cars, factories, and cities, countries that have it often gain money and influence. For much of the 20th century, Venezuela’s oil tied it closely to the United States, whose companies helped drill, refine, and buy Venezuelan oil.
Oil did not just shape Venezuela’s economy. It shaped its politics, its relationship with the U.S., and the daily lives of its people.
Oil Money and Early Ties to the United States
For many decades, U.S. oil companies operated in Venezuela, extracting oil and selling much of it to the United States. Venezuela earned money from this, but much of the industry was controlled by foreign companies.
Oil wealth helped Venezuela become one of the richer countries in Latin America during the mid-1900s. But it also created a problem: the country relied on oil for almost everything. Instead of building many different industries, Venezuela focused on oil and used oil money to pay for government programs.
This close oil relationship also meant that Venezuela and the United States became economically linked, even when they disagreed politically.
Taking Control: Nationalization and a Petrostate
In 1976, Venezuela made a bold decision. The government nationalized the oil industry, meaning it took control from private companies and created a state-owned oil company called PDVSA.
Foreign oil companies, including U.S. companies, were paid for what they lost, and oil exports to the U.S. continued. Venezuela still sold oil to the United States, but now the Venezuelan government controlled the money.
This turned Venezuela into a true petrostate—a country whose government depends heavily on oil income. When oil prices were high, money flowed in. Governments used oil profits to fund schools, housing, food programs, and healthcare. Many people’s lives improved.
But this system had a hidden weakness: if oil failed, everything else would too.
Oil, Politics, and Growing Dependence
By the late 1990s, oil production was strong, but politics were changing. Hugo Chávez was elected president in 1999, promising to use oil wealth to help the poor and reduce foreign influence.
Under Chávez, oil money was used to fund large social programs. At the same time, the government began to use PDVSA for political goals, not just oil production. After a major oil strike in the early 2000s, thousands of experienced workers were fired, and loyalty to the government became more important than expertise.
Oil money still came in—but less was invested back into the oil industry itself. Equipment aged. Maintenance was delayed. Production slowly declined.
Because oil paid for so much, the government continued spending as if high oil prices would last forever.
When Oil Fell, the Country Fell With It
When global oil prices dropped in the 2010s, Venezuela was unprepared. Oil production had fallen, savings were low, and the government had few other sources of income.
To try to control the crisis, the government:
* Set price controls on food and goods
* Controlled access to foreign money
* Printed more money to pay its bills
These actions backfired. Hyperinflation made money nearly worthless. Stores ran out of food. Hospitals ran out of medicine.
Oil—once Venezuela’s strength—had become its trap.
From Chávez to Maduro: Power Without Stability
After Chávez died in 2013, Nicolás Maduro became president. By this time, oil production was collapsing and daily life was becoming harder.
Large protests erupted between 2014 and 2018. The government responded by cracking down on opposition and limiting freedoms. Elections became widely disputed, and trust in democratic institutions weakened.
At the same time, Venezuela’s oil industry—once a source of pride—was barely functioning. The government had power, but not stability. Oil no longer brought prosperity, yet it still shaped every major decision.
The United States: From Oil Partner to Adversary
As Venezuela’s crisis deepened, the United States changed its approach.
Once a major buyer of Venezuelan oil, the U.S. placed sanctions on Venezuelan officials and later on the oil industry itself. U.S. courts accused Maduro and others of serious crimes related to drug trafficking. Rewards were offered for arrests.
The U.S. government argued that pressure was needed to hold leaders accountable. Critics argued that sanctions hurt ordinary people and violated Venezuela’s sovereignty.
What had once been a business relationship built on oil became a political and legal confrontation.
Many Layers, One Moment
The current situation in Venezuela did not come from a single decision or leader. It grew from layers of history:
* Dependence on oil
* National control mixed with mismanagement
* Political power tied to oil money
* A long, complicated relationship with the United States
* Economic collapse turning into political crisis
Oil connected all of it.
