President Donald Trump took decisive action in Venezuela to start the year, capturing Venezuelan leader Nicolás Maduro in Caracas. The country has appointed an interim leader to show that it is not under U.S. control, NPR reported. The fallout from Maduro’s capture is still taking shape, but President Trump has declared victory and anticipates Venezuela “turning over” up to 50 million barrels of oil to the U.S.
That type of oil supply is enough to produce some changes to your utility bills. Here’s how it may affect your budget.
Utility Bills Could Drop Due to Higher Oil Supply
President Trump’s recent announcement of Venezuela “turning over” up to 50 million barrels of oil could result in more oil flowing into the United States. As supply increases, oil prices go down and that could translate into more affordable utility bills.
However, homeowners shouldn’t expect life-changing savings based on that amount alone. According to the U.S. Energy Information Administration (EIA), the United States consumes an average of about 20 million barrels per day. At that figure an additional 50 million barrels of oil would covers only 2 1/2 days of U.S. oil consumption. It could help, but it may not be a significant decrease.
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Additionally, per NBC News, Trump has also expressed interest in expanding the U.S. oil industry’s operations in Venezuela. With having Venezuela as an a producer of oil, it benefits the United States since that helps keep our oil prices lower, Trump told NBC News. However, that would require a significant investment from oil companies and some are skeptical, per NBC News.
It’s estimated that Venezuela has 303 billion barrels of oil in reserves, waiting to be tapped. It’s the largest oil reserve in the world. Venezuela was once the top oil exporter in the world before underinvestment and mismanagement took effect in the 1970s. If Venezuela reclaims the top position, it can produce an additional 10 million barrels of oil per day, which is roughly the amount that Saudi Arabia produces, according to EIA. CNBC reported that Venezuela only produces 800,000 barrels of oil per day, which is far below its potential.
Renewable Energy Investments Could Decrease
Renewable energy has the potential to reduce utility costs in the long run, but lower oil prices could reduce the amount of money utility companies put into renewable energy. Alternative energy sources are primarily more desirable when they are more affordable. Electric vehicles (EVs) are the recent poster child for this phenomenon. EV sales dropped across the board the moment the EV tax credit expired and there was a surge of buyers right before the deadline, Forbes reported.
Lower oil prices could stall renewable energy projects, with Politico Pro warning that years of talk about a global clean energy transition can amount to nothing. Those projects could reduce utility bills in the long run, so slowing them down can prolong the savings. Increasing the oil supply and lowering prices offers guaranteed relief now at the cost of potentially (but not guaranteed) higher cost cuts from renewable energy in the future.
A ScienceDirect research paper that analyzed the relationship between oil prices and renewable energy sources concluded that when oil prices drop, investing in renewable energy can seem less economically attractive. The same paper also cited “an inverse correlation between oil prices and the development of renewable energy sources,” with high oil prices stimulating interest and investment in renewable energy.
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Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 2 Ways Your Utility Bills Could Change After Trump’s Actions in Venezuela
