Post B20m9RWCPNmLJOVB5s by tezoatlipoca@mas.to
(DIR) More posts by tezoatlipoca@mas.to
(DIR) Post #B20iB0gWkIWeqspBR2 by SeanCasten@mastodon.social
2026-01-05T15:26:09Z
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With Trump very transparently saying that the invasion of Venezuela was to take their oil, let's dive into oil markets. TL;DR - it's not at all clear to me that Trump or the people around him have any coherent long term strategy.
(DIR) Post #B20iB5uXJdhd3mPwSu by SeanCasten@mastodon.social
2026-01-05T15:32:05Z
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1. First, in deference to POTUS, let's use his words. He's not taking their oil. He's taking assets back that were "illegally expropriated 2 decades ago". IOW, oil majors are still angry that Venezuela nationalized their oil industry and kicked them out. https://www.reuters.com/business/energy/us-pushes-oil-majors-invest-big-venezuela-if-they-want-recover-debts-2026-01-04/
(DIR) Post #B20iBAqSyCPyMbYGJc by SeanCasten@mastodon.social
2026-01-05T15:32:25Z
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2. There's a long conversation I don't need to add to here about the ethics of oil major colonialism. I'm sure Trump shares those ethics, but if that's his logic then he should also invade Saudi Arabia to give BP & Shell their assets back. To put it mildly, that precedent would be bad.
(DIR) Post #B20iBG3laB1mXIoSEy by SeanCasten@mastodon.social
2026-01-05T15:36:33Z
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3. But let's just come back to current markets. First, as I've noted a lot lately, US oil demand is flat for the last 20 years. That's created a lot of wealth for American consumers as efficiency has allowed us to spend less money on gasoline. We don't need more oil production.
(DIR) Post #B20iBLLfv1K8wIEKLg by SeanCasten@mastodon.social
2026-01-05T15:41:52Z
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4. The other side of that coin is price of course. One might need more production if supply is falling in the face of flat demand but that would necessarily lead to higher prices. We've not seen that since the global economy settled down from all the COVID supply distortions.
(DIR) Post #B20iBQ9o2ZnhqviQ2i by SeanCasten@mastodon.social
2026-01-05T15:47:02Z
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5. But let's give Trump the benefit of the doubt. He wants to flood the market with oil and drive price down farther and - as the US DOE has noted - Venezuela has the largest proven reserves in the Western Hemisphere... or do they? https://www.eia.gov/international/analysis/country/VEN
(DIR) Post #B20iBVKcnmQRtvod6G by SeanCasten@mastodon.social
2026-01-05T15:49:33Z
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6. The key is that word "proven". When you first tap oil, you estimate how much is there. Then you map the geology to get a better estimate. Then you figure out how much is economically recoverable. Proven / probable / economically recoverable are different things.
(DIR) Post #B20iBZvHjQ7w8mzxnU by SeanCasten@mastodon.social
2026-01-05T15:51:51Z
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7. If you own the rights that field it is in your interest to overstate how much you can economically recover since you can borrow against that asset. Energy experts do their best to use accurate, apples:apples comparisons but given the incentives the data is never perfect.
(DIR) Post #B20iBezisLeDs074uO by SeanCasten@mastodon.social
2026-01-05T15:53:56Z
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7. So you know that Maduro guy? The bad guy who we shouldn't trust? Well he had a big say in moving a bunch of Venezuela's oil reserves from the "probable" to the "proven" category. https://x.com/RARohde/status/2007738396639465774?s=20
(DIR) Post #B20iBkAXdYGxv0DHxw by SeanCasten@mastodon.social
2026-01-05T15:58:14Z
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8. Venezuela is also in a really dire financial situation. Maduro had a strong incentive to cook the books. Any reasonable person should assume that he has significantly overstated Venezuelan assets, including but not limited to oil reserves. https://x.com/Brad_Setser/status/2007872105669616055?s=20
(DIR) Post #B20iBpJaVLTnsVU5GC by SeanCasten@mastodon.social
2026-01-05T16:04:38Z
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9. But there's another problem. Venezuelan oil isn't very good oil. It's "heavy" and "sour" in industry parlance. Lots of tars & sulfur. Which means it takes a lot more work and money to convert it into low sulfur, lighter, more valuable products. https://x.com/Yellowbull11/status/2007505384429191617?s=20
(DIR) Post #B20iBuDOHoUf4jchnM by SeanCasten@mastodon.social
2026-01-05T16:10:49Z
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10. So the upshot is that Trump is trying to take control of an asset that is (a) likely overvalued (b) very expensive to process (c) is inside an economic basket case of a country (d) produces a commodity in a world with low prices and flat / falling demand.
(DIR) Post #B20iBz2aLPoy2fbe9A by SeanCasten@mastodon.social
2026-01-05T16:16:16Z
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11. Maybe there's some larger strategic play I'm missing. And I'm always leery to accuse someone of stupidity, if only because you never learn anything if you assume you're the smartest person in the room. But it's hard not to see this as a ready-fire-aim mistake with massive future costs.
(DIR) Post #B20iC4PoMUN2i9VlXk by SeanCasten@mastodon.social
2026-01-05T16:19:15Z
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12. So maybe the Occam's razor, simplest answer is what a friend and former senior DOE official from the Biden WH told me after Trump had filled out his new energy team:
(DIR) Post #B20iC9BSdGrXV5psMy by SeanCasten@mastodon.social
2026-01-05T16:19:44Z
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13. "My job, for the past 4 years was to talk to every expert in the energy industry, from academia to government to industry. And I never heard of most of these guys." /fin
(DIR) Post #B20iCDyAq6CmLKepqy by SeanCasten@mastodon.social
2026-01-05T16:25:42Z
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Postscript: thanks to all who have shared this picture, perfectly summarizing the prior 13 posts.
(DIR) Post #B20iLctjWe3sGO41NA by jeffcliff@shitposter.world
2026-01-06T14:14:09.712133Z
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@SeanCasten @Economic_Hitman this whole thread
(DIR) Post #B20iOgtH8aadVzJL2O by jeffcliff@shitposter.world
2026-01-06T14:14:43.340491Z
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@SeanCasten good enough to compete with #alberta
(DIR) Post #B20iWDOEhiFEKxNdzc by jeffcliff@shitposter.world
2026-01-06T14:16:04.606873Z
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@SeanCasten Canada. This is about putting pressure on mark carney & canada and taking the one asset alberta has and making it worth less.
(DIR) Post #B20idaWB738g5vbwJs by Sadsquatch@mastodon.social
2026-01-05T16:37:48Z
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@SeanCasten really interesting thread, thank you. Meanwhile, Alex Jones has been yelling at his audience that neither oil nor fentanyl are the real reasons for attacking Venezuela—Trump can't tell the public the real reason, you see, which is...ending Democrats' widespread election fraud, which has apparently been funded by Maduro or something? Just as coherent and plausible as it sounds.
(DIR) Post #B20ifZoWhXtsUS8pUm by FoxVK@mastodon.cloud
2026-01-05T18:25:04Z
3 likes, 1 repeats
@SeanCasten
(DIR) Post #B20iiiuzJBvzaxfF8i by HankB@fosstodon.org
2026-01-05T17:21:25Z
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@SeanCasten That worked so well in Iraq./s for the sarcasm impaired.
(DIR) Post #B20ijXRfRxmgInL31E by mark@mastodon.fixermark.com
2026-01-05T16:44:28Z
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@SeanCasten This is pretty much American foreign policy 101: great at problems that can be solved by focused violence with clear goals; awful at post-violence support, sustaining, and establishment of a stable new status quo.Post-WWII Japan seems a weird outlier and I am not enough a student of history to have any idea why.
(DIR) Post #B20ilJlJIKrARZNHuK by connynasch@mastodon.social
2026-01-05T17:17:42Z
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@mark @SeanCasten Japan is on the other side of the planet and does not have huge amounts of oil or other such things. What it does have is brain and culture.
(DIR) Post #B20inCcqnabotDJgSu by theothersimo@mastodon.social
2026-01-06T01:25:28Z
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@mark @SeanCasten everyone forgets that George Bush ran on a campaign of “no more nation building” and he did his best to avoid it. No nation building, just occupation.
(DIR) Post #B20ir2PciJRaN6xTtI by TinJar@mastodon.social
2026-01-05T19:18:18Z
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@SeanCasten A/Demand is flat in the US but not zero - still the largest consumer of #oil and #gas Globally, demand is unlikely to go to zero any time soon. But the increasing sales of #EV from #China will decrease the demand over the medium- to long-term. Hence, the right move for oil majors is to whittle down the competition as quickly as possible and own/control outright as much of oil as possible. Then form a tight cartel to keep profits flowing.
(DIR) Post #B20ir3ldfweGZgGZqS by TinJar@mastodon.social
2026-01-05T19:21:18Z
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@SeanCasten B/#Russia #SaudiArabia #Qatar #UAE are working closely with #US to achieve this goal. Getting control of #Iran #Iraq #Venezuela #Guyana #Nigeria etc. is crucial to ensure that there is no competition from some upstart. #Europe and #China are the big obstacles (with South/SE Asia). If those band together to electrify rapidly then the demand shrinks much faster. If #democratic states in the #US join them - this goes much faster.
(DIR) Post #B20ir4utP1e28fbTuK by TinJar@mastodon.social
2026-01-05T19:25:44Z
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@SeanCasten C/If #Europe #China S/SE Asia (w/ Dem states in the US) indeed do that, then the last resort for #GOP #US #Russia #SaudiArabia is to try and subdue China in some way in order to reduce its ability to produce #EV at scale and rapidly. This is where it is probably headed. Some kinda war against China by the US, Russia, and middle east. The rest (Europe, S/SE Asia, Africa, and S America) may sit it out... which makes it more likely that China backs down.
(DIR) Post #B20ir635C3n3eMRXJQ by TinJar@mastodon.social
2026-01-05T20:17:35Z
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@SeanCasten D/#greenland #canada #panama are also probably in the list in order to bring the resources (esp. #oil) under tighter control of the #US Also - in the US - oil-based society has broad and deep public support (bipartisan). Both Obama and Biden (and Harris) touted oil and gas production. US is a petrostate and not only because of the oil companies. Every single person who chooses to drive a gasoline/diesel car when alternatives are available essentially supports oil.
(DIR) Post #B20kIi3C6z9pHdE4qu by ThatPrilla@theatl.social
2026-01-05T17:21:32Z
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@SeanCasten Cutting off Cuba from relatively cheap energy in an effort to destabilize it seems like a potential play.
(DIR) Post #B20m8Bhri8lRyzMORs by tezoatlipoca@mas.to
2026-01-05T16:44:19Z
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@SeanCasten re: "some larger strategic play I'm missing" - if that TV show with the guy from The Office is to be believed - joking not joking - there may be some other natural resources besides oil going on in VZ. Think you're right tho, this was just a mistake. Or maybe yet another _Epstraction_
(DIR) Post #B20m8CzGwuHZxGVoDg by HankB@fosstodon.org
2026-01-05T17:36:01Z
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@tezoatlipoca @SeanCasten I've been trying to figure out how flooding the market benefits Russia who (AFAIK) derives most of their revenue from selling crude.I'm hearing rumblings about how difficult it will be to process so maybe the plan is to say "We can't make that happen" take crude from VZ off the market.
(DIR) Post #B20m9RWCPNmLJOVB5s by tezoatlipoca@mas.to
2026-01-05T17:48:06Z
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@HankB @SeanCasten Oh yes.. those nationalized oil production assets that have now been given back to their US biological parents? Well they're decades out of date, need modernization, safety improvements. Decades of investment required likely, yes.