Some 45 years ago, I worked for Oil Buyers’ Guide, a Lakewood-based publication that extensively covered world oil markets. Each summer, the company would invite scores of oil executives to come aboard the Miss Belmar vessel and cast lines for bluefish some 20 miles off the coast of Monmouth County.
The fishing was fruitful and festive and there was always a contingent of employees from the various Venezuelan oil subsidiaries. I distinctly remember rubbing bait-stained elbows with employees from Corpoven, Petroven, Maraven, and Unoven, many of whom lacked the “sea legs” taken for granted by the Miss Belmar crew. The camaraderie enjoyed with the Spanish-speaking “Vens” was a highlight and it looked then like the entire world, or at least the U.S. Northeast, would forever see cooperation with the resource-rich South American country.
Clearly, that optimism proved to be ill-conceived. Earlier this month, President Nicolás Maduro was ousted via U.S. intervention, and soon after America assumed control of Venezuela’s oil’s movement to international markets. The goal, according to the Trump administration, is to ensure Venezuelan oil continues to feed global refineries, whether it be at the U.S. Gulf Coast or at distant destinations in India and China.
For those eyeing gas station price placards waiting for some sizable swing, a big of cold water: The seizure of Venezuelan assets won’t mean much for New Jersey residents this year. A successful reboot of Venezuelan oil production might impact supply balances in the next decade, but for now what happens there is more theatrical than economical. Initial weeks since the seizure have seen small declines in Venezuelan exports, but there is some “low hanging fruit” in the oil patch that could swell global supply slightly later in 2026 and through 2027.
To fully understand the scope of what Venezuela and its oil means to America, we need to turn back the clock a bit.
A quick history lesson
At its peak, in 1998, Venezuela was producing 3.7 million barrels per day, more than U.S. output at the time (U.S. production is now about 13.7 million barrels per day). Simultaneously, but quietly, Venezuelan companies and foreign partners also presided over a refining network of more than 2 million barrels per day in Venezuela and the Caribbean. The Venezuelan affiliates commonly sent gasoline and heating oil to New York Harbor.
Even as recently as the early part of the 21st Century, the country boasted about 2 million barrels per day of heavy crude production. But chaos and infrastructure decay penalized the country after populist President Hugo Chavez assumed power in 1999 and 2000, and the country deteriorated further under Maduro.
The robust proven reserves of crude enabled PDVSA to pursue plenty of downstream U.S. business. The state-run company bought 50% of CITGO back in 1986 and purchased the remaining share in 1990. CITGO was regularly ranked as the most hospitable supplier in the U.S. It was perhaps Venezuela’s most lucrative U.S. investment, with dozens of CITGO marketers benefitting not just from the oil, but from gracious hospitality.
(What happens to CITGO will be decided in the courts but as 2026 began, a new entity backed by private equity is lined up to take possession of the 829,000 barrels per day of refining as well as more than 40 product storage terminals and the supply to thousands of independent CITGO dealers and distributors. Price swings for CITGO or other similar suppliers barely move based on Venezuelan disruptions since they contribute less than 2% of the crude run by American refineries. CITGO is no longer run by individuals inside Venezuela.)
Some six years into the regime of populist Venezuelan President Hugo Chavez, beginning in 2005, Venezuela sent free heating oil to numerous cities in the Northeast. Much of the oil was distributed to cash-starved customers in New England via Citizens’ Energy, a company founded by Joseph Kennedy. The free Venezuelan oil ceased about a decade ago.
The PBF Refinery in Paulsboro.South Jersey TimesWhat happens now; Jersey connections
In 2026, the status of the Bolivarian republic is a mess. Oil production most recently has been about 900,000 barrels per day, or less than a quarter of what was witnessed in 1998. Venezuelan refineries this decade have operated at less than 25% of capacity, or a fraction of the 90% and greater rates boasted by U.S. companies. New Jersey refineries in Linden and Paulsboro, for example, target run rates above 90% for the most part and sometimes operate at even higher rates during the gasoline driving season.
The shabby status of Venezuelan refiners has driven surging export demand for gasoline and diesel out of Texas and Louisiana. The most recent measurement of diesel exports (2024) saw a record 1.29 million barrels per day sent to dozens of countries, many of which were scattered through the Caribbean and South America. That same year saw U.S. gasoline exports of 800,000 barrels per day. Venezuela’s loss translates to gains for U.S. refiners of all type and indeed the absence of Venezuelan fuel has helped U.S. refiners not just survive but prosper. U.S. exports were once an afterthought but the movement of more than 750 million barrels offshore has been an outlet that has saved many U.S. companies.
What happens now may further enhance that refiner prosperity. Notwithstanding the media circus that followed the code-named Operation Resolve which removed Nicholas Maduro, there is room for plenty of optimism in U.S. energy circles.
Current Venezuelan oil production of 900,000 barrels per day may not change much in 2026 although it is unwise to bet against western engineers. JP Morgan believes that beginning in late 2026 efforts could boost production by 300,000 to 500,000 barrels per day by the end of 2027. If local utilities, politics and stability are maintained, much more oil could come to market by 2030 or later.
President Trump has made it known that he wants the Venezuelan oil to be processed by U.S. companies and he will find no shortage of willing buyers in Texas and Louisiana as well as the occasional oil for Northeastern refineries. The measurement of success in this endeavor comes via the global discount for heavy sour crude. The thick viscous crude can only be run by a handful of companies with expensive equipment. But those refineries capable of processing the Venezuelan crude can benefit from discounts to more common light sweet barrels. Just days after the U.S. seized millions of barrels of Venezuelan oil, the discount for that crude widened from about $6 per barrel at the U.S. Gulf Coast to $8 per barrel or more.
Interestingly, the company with the most leverage for that discount is Parsippany-based PBF. A Morgan Stanley commentary on U.S. refiners published this month noted that each dollar widening in the discount can translate into cash flow upside of more than 9% for PBF. In addition to its properties in Delaware and New Jersey (Paulsboro) PBF operates a 185,000 barrels per day refinery in Louisiana that was once a joint venture partner with Venezuela. Unlike sweet crude refineries, the complex can process the cheap but viscous Venezuelan oil.
Prior to Operation Resolve, U.S. imports were limited to nominal crude volumes going to Chevron, which operates one of the most sophisticated refineries in the world, in Mississippi. Six years ago, U.S. companies would typically run about 830,000 barrels per day of the heavy crude.
In addition to the crude oil necessary to make gasoline, diesel and jet fuel, Venezuela often would send two other critical products to the Garden State. Venezuela was by far the largest foreign supplier of asphalt to the U.S. and also provided roofing flux which is critical in the building business. It has been more than a decade since those two products arrived at New Jersey ports.
Whether or not Venezuela amounts to a success story in the next five years, the president’s campaign to grab the oil for U.S. companies (and distribution of proceeds to the Venezuelan people) is clearly a game-changing event. The most likely scenario for global oil markets suggests plentiful (and sloppy) supply and distribution in all of 2026 and perhaps in a portion of 2027. Additional Venezuelan oil should ensure that gasoline, diesel, jet fuel and marine oil are bountiful in the next 24 months.
Frigid temperatures in New Jersey have led to recent natural gas cost spikes.
Patti Sapone | NJ Advance Media
Natural gas spikes (told you so)
In September, the first column I wrote for NJ.com warned that the next energy crisis could come if there was a cluster of frigid temperatures this winter.
That cluster looks to be in our future in the next 10 to 14 days. The state and the entire region will likely see many commercial and non-critical customers contend with interruptions of natural gas. Liquid fuels, including diesel, heating oil, and kerosene will see unprecedented demand from now through Ground Hog Day and perhaps later.
Natural gas prices have spiked more than 80% higher in the last few days, and diesel fuel has roared more than 30 cents per gallon higher so far in January. An epic last 10 days of January looms with homeowners and some commercial businesses dealing with prices not seen since the initial outbreak of the Russia/Ukraine War.