Venezuelan reserves are the largest proven reserves in the world, but decades of neglect have damaged the facilities for transporting this oil to market. And Venezuela is a member of OPEC. And they need to work within the framework of OPEC price controls and production levels. But it will take years for this oil to be developed economically and environmentally in a sane manner. But I think within a year, assuming some of the companies return who were kicked out – like Exxon-Mobil- it will reduce or limit the price of crude oil. But because domestic production is necessary, and domestic refining is necessary, the price of oil will hover around the basic cost of developing any oil reserve. That means $50-60 per barrel. That’s cheap considering inflation in the past 30 years.
The problem is that it will embolden states like Colorado, the left coast, and New England to abolish all drilling domestically as well as trying to eliminate refining in their states. This could lead to more refineries being built out of the country and importing finished product. That’s not necessarily a good thing. Meanwhile it puts Canada in a pickle. The thick tar sands oils will be even cheaper, produce less tax revenue, and the current government of Canada is rapidly destroying their domestic oil industry as it is.
In other words, it is business as usual. Oil prices will remain in a race dominated by swings that relate as much to geopolitical machinations as it does to the economics of producing and refining oil per se.