UNDERSTANDING AMERICA'S OIL OBSESSION

A dramatic U.S. raid capturing Venezuela's Nicolás Maduro thrust Caracas's oil into U.S. hands, as Washington unveils plans today to refine and sell seized crude.

- TDG NETWORK

Venezuela has been intertwined with the U.S. oil story from its earliest days. During World War II the Latin American nation adopted a “fifty-fifty” revenue-sharing law that split profits evenly between the government and foreign companies, preserving U.S. concessions. As one of OPEC's founding members, Venezuela sought to defend prices and assert sovereignty over its resources. For decades it ranked among the world's top oil producers and remained one of the United States' largest suppliers. The U.S. Energy Information Administration notes that Venezuela is a major OPEC member and the fourth-largest source of U.S. oil imports; more than 95% of its crude shipments are directed to the U.S. Gulf Coast, where refineries are equipped to handle heavy, sulfur-rich Venezuelan crude. Imports peaked at 1.4 million barrels per day in 1997 but fell to about 879,000 barrels per day by 2012 as production declined. The decline reflects years of political upheaval and nationalization: President Hugo Chavez, elected in 1999, increased state control over the national oil company PDVSA; a general strike in 2002 disrupted output; and subsequent mismanagement and sanctions caused production to plummet. Nevertheless, Venezuela's vast heavy-oil reserves continue to attract interest, illustrating how U.S. energy security has long been linked to political and economic developments in South America.