President Donald Trump’s talk of reaping the rewards of Venezuela’s oil industry after ousting Nicolas Maduro is being ridiculed by Nobel Prize-winning economist Paul Krugman.
Krugman argues that the White House is promoting a story that does not align with the reality of Venezuela’s politics or the challenges of extracting its heavy crude.
In a post on his Substack, Krugman claimed that Trump treats Venezuela’s oil reserves like an easy jackpot. However, control of the country remains uncertain following U.S. actions and the removal of Nicolás Maduro. Krugman described this viewpoint as an unrealistic fantasy masked as a strategy.
“In short, Trump believes he has captured a valuable prize in Venezuela’s oil fields. This idea would still be a fantasy, even if he were truly in charge of a nation that, in reality, is still governed by the same corrupt leaders who controlled it before Maduro was taken,” Krugman wrote.
His criticism arrived as the administration promoted an ambitious timetable for reviving Venezuela’s struggling oil sector. In an interview with NBC News, Trump stated that U.S. oil companies could help rebuild the country’s energy infrastructure in less than 18 months.
🚨 President Donald J. Trump announces Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America. pic.twitter.com/08qI7MvCpk
— The White House (@WhiteHouse) January 7, 2026
He suggested that the government might reimburse companies for their investments in the project. Reuters also reported that the administration planned to meet with major oil executives to explore ways to increase Venezuelan output, while industry sources cautioned that damaged facilities, security threats, and the challenges of producing and refining heavy crude could make the effort a long and costly process rather than a quick success.
Krugman pointed to Trump’s reimbursement proposal as evidence that the sales pitch is already faltering. He claimed that the president speaks as if the United States controls Venezuela, despite the dispute over this assertion.
“On Monday, Trump implied he might reimburse oil companies for their investments in a country he claims to control, without any evidence to support that,” Krugman wrote.
“We’ve quickly shifted from grand talk of huge money-making opportunities to a proposal that, in effect, asks U.S. taxpayers to subsidize oil industry investments in Venezuela.”
At the heart of Krugman’s argument is a point he believes Trump fails to understand or deliberately overlooks that oil in the ground is not automatically valuable, especially when extraction costs are high, and prices aren’t skyrocketing. Krugman noted that Trump’s perception of oil as a valuable asset is outdated.
“At a deeper level, Trump’s belief that oil in the ground is a valuable asset is decades behind the times. Oil is considered cheap by historical standards,” he wrote.
He referenced the U.S. fracking boom as a key factor keeping prices from remaining high for extended periods. The industry’s ability to quickly increase supply acts as a ceiling on global prices over time. “The breakeven price of fracked oil, which is the price needed to make it profitable to drill a new well, is around $62 a barrel in the most important U.S. production areas,” Krugman stated. He added that while prices fluctuate, they usually return to this level after a few years.
Krugman also argued that Venezuela’s most notable reserves cannot be activated instantly. He pointed out that even $62 a barrel would not justify new investments in Venezuela’s Orinoco Belt, where he estimated the breakeven point is above $80 a barrel, even before considering political risks.
