Chevron, Venezuela and the Paradox of Plenty

Summary

Planet Money: Chevron, Venezuela, and the Paradox of Plenty

Date: January 17, 2026
Podcast: Planet Money (NPR)
Hosts: Kenny Malone, Erika Barras
Guests/Experts: Terry Karl (Stanford political economist), Miguel Tinker Salas (Venezuelan historian)

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Episode Overview

This episode unpacks the long, intricate relationship between Chevron and Venezuela and explores how the country became the world’s first “petrostate.” Through interviews with economists, historians, and people who lived through key moments, the show examines Venezuela’s journey from coffee exporter to oil-rich boomtown to its present struggle—and why Chevron, of all companies, has uniquely maintained a presence in Venezuela through economic booms, busts, corruption, and political upheaval. Central to the discussion are the economic concepts of the “resource curse” and the “paradox of plenty.”

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Key Discussion Points & Insights

1. The Unique Spotlight on Chevron

• Chevron’s exceptional endurance in Venezuela is highlighted during a dramatic White House meeting on the country’s future (00:00–02:00).
• Notable quote: “You were the only one that was there for all that.”—President Trump, recollecting Chevron’s persistence (01:00).

2. Venezuela: From Coffee to Oil, Birth of the Petrostate

• Venezuela’s original agrarian economy (primarily coffee exports) is rapidly eclipsed by a 1922 oil discovery at Lake Maracaibo (05:04–07:08).

  • “Lake Maracaibo gusher” and oil raining 200 feet in the air set off the oil rush.
  • Venezuela quickly becomes the world’s top oil exporter by the late 1920s.

• Introduction of the term “petrostate” by Terry Karl to define countries built around oil (08:17–08:45).

  • Quote: “Oil states are different from all other states, period.” —Terry Karl (08:31)

3. Economic Consequences: Dutch Disease and the Resource Curse

• The “Dutch disease”: Oil wealth causes Venezuela's currency (the bolivar) to skyrocket, destroying the coffee market and wiping out the prior economy overnight (09:06–10:25).
  • Quote: “They lose their entire coffee market...They lose it entirely.” —Terry Karl (10:21–10:29)
• The “resource curse” (or “paradox of plenty”): A single commodity brings riches but results in instability, corruption, authoritarianism, and monoeconomic vulnerability (11:11–11:23).

4. Rise of Oil Nationalism and OPEC

• 1940s–1970s: Venezuela gradually reclaims more control over oil, starting with a 50/50 profit split (“5050 agreement”) with foreign companies during WWII (12:36–13:40).

  • Quote: “We want 50% of everything you take.” —Juan Pablo Perez Alfonso (12:56)

• Postwar: Venezuela’s Oil Minister Juan Pablo Perez Alfonso spearheads global oil cartelization—leading to the birth of OPEC.

  • Venezuela bands with Iran, Iraq, Saudi Arabia, and Kuwait to set oil prices and production quotas (16:05–16:36).
  • OPEC marks the shift from multinational oil company control to state-driven oil policy.

5. Boom Times and Growing Inequality

• 1950s–1970s: Oil wealth transforms Caracas into a metropolis with “freeways, high rise structures, Concorde flights,” but extreme inequality persists (18:16–19:39).
  • “La Venezuela Saudi” (“Saudi Venezuela”): Petrodollars flow, a growing middle class emerges, luxury and ostentation are visible everywhere (19:43–20:24).
  • Memorable moment: Oil-funded extravagance includes pouring bottles of scotch over books at inaugurations.
  • Quote: “Oil funds are just pouring into the country. There’s so much money around that you can’t even believe it.” —Terry Karl (19:59)

6. Downside of Oil Wealth: Corruption and Collapse

• Despite riches, Terry Karl and others highlight rampant corruption and inefficiency—a classic resource curse symptom.

  • “They were using it as sort of the goose that laid the golden eggs, but they were slowly killing the goose.” —Terry Karl (21:57)
  • Mismanaged infrastructure projects and widespread kickbacks characterized the system (22:03–24:12).

• Growing complacency: Everyone—companies and individuals—plays the system to skim from oil revenues, eroding broader economic foundations (24:00–24:16).

  • Quote: “That’s why I knew it was gonna come apart, because this game doesn’t last.” —Terry Karl (24:16)

7. From Boom to Bust: Political Upheaval

• 1980s: A collapse in oil prices crashes the economy, leading to mass protests (El Caracaso, 1989), poverty, and political uncertainty (25:11–26:41).

  • “You had the rise of new political forces...that claimed they would solve Venezuela’s long-term problems.” —Miguel Tinker Salas (26:41)

• 1990s: The government courts foreign oil companies back; widespread public discontent persists despite “la Apetura” (“the Opening”) (26:49–27:01).

8. Chavez and the New Era: Chevron's Calculated Loyalty

• Hugo Chavez comes to power (1999), seizes direct control of oil, eventually forces almost all American oil companies out—except Chevron (27:25–28:16).

  • Quote: “Chevron stuck it out. Chevron agreed.” —Miguel Tinker Salas (28:16)

• Chevron’s rationale: long-term vision and willingness to accept strict terms. In turn, Chevron remains when the rest flee (28:20–28:34).

  • “With the exit of the other companies, Chevron shines.” —Miguel Tinker Salas (28:34)

9. Surviving Sanctions, Staying for Opportunity

• Under sanctions, collapsing economy, and hyperinflation, Chevron negotiates delicate deals to keep operations running, leveraging its role as both economic and geopolitical asset (28:56–29:50).
  • “If we leave, the Chinese step in...Chevron’s presence had both a geopolitical interest as well as an economic interest.” —Miguel Tinker Salas (29:21)
• Chevron now employs ~3,000 Venezuelans and produces 25% of the country's oil—all of it exported to the U.S. (30:00–30:15).

10. Bleak Outlook for Others, Windfall for Chevron

• Venezuela’s oil infrastructure is decrepit and stripped, skilled labor is depleted (~8 million Venezuelans have emigrated since 2014), and the cost to revive the industry is estimated at over $100 billion (31:22–32:02).
  • “It’s incredible. What was left of the industry has been stripped down...the wires have been taken out...the windows have been taken out.” —Miguel Tinker Salas (31:22)
• Other U.S. companies (Exxon, Conoco) remain uninterested due to legal and commercial risks; only Chevron is ready to benefit if the U.S. presses ahead (30:44–32:31).

11. Final Reflection: It's Not the Oil, It’s the Politics

• Terry Karl rejects the notion of a simple “resource curse,” reframing it as a “political resource curse” (32:52–33:16).
  • Quote: “A resource doesn’t have a curse. It’s just black, viscous stuff...It’s how you use it. And that is about human beings.” —Terry Karl (32:59)

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Memorable Quotes & Moments with Timestamps

• “Where’s Chevron?” —President Trump (01:50)
• “Petrostate...oil states are different from all other states, period.” —Terry Karl (08:31)
• “They lose their entire coffee market...They lose it entirely.” —Terry Karl (10:21–10:29)
• “Oil was everywhere. You could not escape it.” —Miguel Tinker Salas (14:13)
• “To baptize the book they poured an entire bottle of scotch.” —Terry Karl (20:08)
• “Es el excremento del diablo. It’s the devil’s excrement.” —Juan Pablo Perez Alfonso, relayed by Terry Karl (21:31)
• “With the exit of the other companies, Chevron shines.” —Miguel Tinker Salas (28:34)
• “If we leave, the Chinese step in ... you had an American footprint.” —Miguel Tinker Salas (29:21)
• “It’s not the oil, it’s how you use it. That is about human beings.” —Terry Karl (32:59)

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Timestamps for Key Segments

• 00:00–02:18 – White House meeting; Chevron’s unique standing
• 05:04–07:08 – Discovery of oil at Lake Maracaibo
• 08:17–10:25 – Introduction and effects of the “petrostate” and Dutch disease
• 12:36–13:40 – The 50/50 agreement and oil nationalism
• 16:05–16:36 – Formation of OPEC
• 19:43–20:24 – “Saudi Venezuela” wealth culture
• 21:31 – “Devil’s excrement” as a metaphor for oil’s double-edged effect
• 24:16 – Why Venezuela’s economic model was unsustainable
• 25:11–26:41 – El Caracaso protests and the shift in Venezuelan politics
• 27:25–28:34 – Chavez nationalizes oil, Chevron alone stays
• 29:21 – Geopolitical rationale for Chevron’s continued presence
• 31:22 – Degraded state of oil infrastructure and loss of expertise
• 32:59–33:16 – Reframing the “resource curse” as a political issue

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Tone & Style

The episode balances a conversational, sometimes wry narrative with clear, accessible economic analysis. The use of personal anecdotes, vivid historical detail, and signature sound effects (“You want sound effects?”) keeps the tone lively and relatable. Guest experts’ voices add scholarly weight but are always grounded in real-world implications.

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Conclusion

The story of Chevron and Venezuela offers a sweeping lesson on how oil wealth can alternately build and devastate a nation—depending not on the resource itself but on the political and social structures surrounding it. With Venezuela’s oil industry in ruins and only Chevron standing to gain from renewed U.S. interest, the episode closes by questioning whether the cycle of plenty and poverty is destined to repeat—or might finally change—if the human choices guiding the resource do.

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For listeners seeking to understand Venezuela’s decline, the resilience of Chevron, and the eerie echoes of history in global oil politics, this episode provides a master class—at once cautionary and compelling.

Transcript

[Erika Barras]

This is Planet Money from npr. In the wake of news that the United States had captured and arrested the leader of Venezuela and would run the country for some amount of time, one specific American company found itself suddenly in a very strange spotlight.

[Kenny Malone]

Case in point, a huge meeting last week at the White House.

[Marco (Producer or Host Assistant)]

But today, I'm delighted to welcome almost two dozen of the biggest and most respected oil and G executives in the world to the White House.

[Erika Barras]

President Trump assembled basically the entire American oil industry to discuss his goal of turning Venezuela back into a booming petroleum exporter.

[Kenny Malone]

But Trump appeared to be looking out into the crowd for one company in particular.

[Marco (Producer or Host Assistant)]

Where's Chevron?

[Kenny Malone]

Where's Chevron? He asks.

[Terry Karl]

Where are you?

[Erika Barras]

Far right.

[Marco (Producer or Host Assistant)]

No, I thought you'd have a better location. You were the only one that was there for. For all that.

[Erika Barras]

Yes, Chevron was there in Venezuela from the time that oil literally rained down on the country, caused a boom, and turned Venezuela into the biggest oil exporter in the world.

[Kenny Malone]

Chevron was there when that oil money transformed Venezuela into the first petro state and transformed Caracas into a gilded global capital.

[Erika Barras]

But most notably, Chevron kept being there when things went bad.

[Kenny Malone]

Bad.

[Erika Barras]

And when Venezuela took more and more of the oil industry away from foreign companies.

[Kenny Malone]

And so, in that White House room full of the most powerful oil executives on the planet, Trump singled out Chevron's executive.

[Marco (Producer or Host Assistant)]

I used to call you and say, what the hell is going on with Venezuela? He stuck it out. I don't know if you made money or not, but you stuck it out. They got to give you a lot of credit for that.

[Kenny Malone]

Pretty sure Chevron did make money and are pretty well positioned to keep making it. Hello, and welcome to Planet Money. I'm Kenny Malone.

[Erika Barras]

And I'm Erika Barras. Venezuela and Chevron are perhaps one of the strangest public private partnerships ever. One of the world's most famous and profitable corporations has for decades been plugging away in one of the world's most famous and infamous socialist countries.

[Kenny Malone]

Today on the show, before Saudi Arabia, before Iran, there was Venezuela, the first petrostate, the first country whose entire economy became dependent on oil. And with that blessing, an entire economic textbook of complications opened up. From the Dutch disease to the resource curse to mono economic vulnerability.

[Erika Barras]

And oddly, along for that ride, little old Chevron. Or at least it was little at first, because thanks in part to Venezuela, Chevron is now the second largest oil company in the U.S. yeah, even if.

[Kenny Malone]

They got seated pretty far from the president at the White House.

[Marco (Producer or Host Assistant)]

Marco just gave me a note. Go back to Chevron. They want to discuss something. Go ahead. I'm going back to Chevron. Thank you, Marco.

[Kenny Malone]

The economic history of Chevron in Venezuela the OG Petro State after the break.

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This message comes from insperity. Excellence takes drive, work, perseverance. Tiger woods brings it to the course. Insperity brings it to your business. Want to be the best? Work with the best insperity how you HR matters. Learn [e-mail] Tiger. So you had all those oil executives at the White House talking about Venezuelan oil and not all that excited. Except for Chevron.

[Miguel Tinker Salas]

We very much look forward as a proud American company to help it build a better Future. And so Mr. President, thank you for your leadership.

[Marco (Producer or Host Assistant)]

And you really suffered there. You stuck it out.

[Erika Barras]

To understand what happened to make all those companies leave while Chevron stayed with. We called up Stanford political economist Terry Karl who told us she's interviewed every Venezuelan president except Nicolas Maduro since she started following the story of oil in Venezuela back in the 1970s.

[Kenny Malone]

Venezuelan oil was discovered more than 100 years ago at Lake Maracaibo, which actually happens to be the same lake that inspired Italian explorer Americo Vespucci to give Venezuela its name.

[Terry Karl]

He sees these indigenous people living in houses on stilts and he says, my goodness, it looks like Venice. And he calls it Little Venice, which is what Venezuela means.

[Erika Barras]

Over the next couple centuries, Venezuela became a Spanish colony, then it was part of Colombia. And by the early 20th century it had gained independence, was run by a series of dictators and had its own export economy.

[Terry Karl]

Venezuela is an agrarian country. It exports. One thing I was gonna ask.

[Kenny Malone]

What should we guess? Erica, you wanna guess?

[Erika Barras]

I think yes. I'm gonna guess coffee. It has to be coffee.

[Terry Karl]

Atta girl.

[Erika Barras]

The country's number one export was my favorite bean.

[Kenny Malone]

But not for long. This is a time in the world where there are European and American explorers and botanists and geologists all over the Americas looking for something on land or in the ground that might make them rich. And in Venezuela, some of them were digging up oil in that same place that gave Venezuela its name.

[Erika Barras]

Yeah. In 1922, they made a huge oil discovery at Lake Maracaibo. The Lake Maracaibo gusher. Some surveyors had been digging for oil for years around that lake. And then one morning, the earth started to rumble and there was a loud roar and this small well came alive in a way that no one had ever seen before. It started spouting up oil.

[Kenny Malone]

You want sound effects?

[Erika Barras]

Yeah, please do. 200ft above the derrick, that is. That's what we call the oil well tower thing. It's spewed oil, this black tarry oil that's sprayed everyone and everything in the town.

[Kenny Malone]

And that oil, it blew for nine straight days, raining oil on people and trees and houses. It made headlines. It made lines of oil on people's heads. Also kind of freaked out the townspeople. Reasonably. It made a huge mess. And then it caused a proper oil rush to Venezuela.

[Terry Karl]

The news that Maracaibo has oil trickles out and. And there's a huge rush of primarily.

[Kenny Malone]

US companies because of course, oil in the ground is not an oil industry. Turning that into something requires machinery and geologists and refineries and companies.

[Erika Barras]

And so Venezuela's strongman dictator allowed more than 100 foreign companies to just set up shop and drill away in search of more gushers.

[Kenny Malone]

Venezuela makes some money from this, but those companies make so much more.

[Terry Karl]

It was a boom, a boondoggle.

[Erika Barras]

Through the 1920s, Venezuela very quickly became the biggest oil exporter in the world. And a small group of oil companies emerged as the most aggressive, the most prominent and the most productive companies, you know, like BP and Shell. Eventually they'd be called the Seven Sisters. And among them was a small oil company from California, the company we now know as Chevron.

[Kenny Malone]

And so this was the very messy, gold rushy way that the world's first oil based economy sort of snapped into existence overnight.

[Erika Barras]

There is a word for a country like that, a word that Terry Carl is semi certain she coined in her writing about Venezuela. Petro state.

[Kenny Malone]

No one said petro state before you. Are you sure?

[Terry Karl]

I'm pretty sure.

[Kenny Malone]

How do you know that?

[Terry Karl]

That's what they tell me anyway. That's what they tell me. And the argument, the argument I made is that oil states are different from all other states, period.

[Kenny Malone]

Petro states are simply countries with an economy built around having oil and oil overnight. Venezuela had become the first.

[Erika Barras]

Discovering massive amounts of oil is a treasure chest holding a Pandora's box, holding an economics textbook because along with the possibility of global riches comes a host of potential issues.

[Kenny Malone]

Venezuela would not have known about these issues in the 1920s, but today, these things have memorable names like the Dutch disease, the resource curse, monoeconomic exposure to exogenous shock, which, okay, fair enough, that doesn't have a memorable name. But all of these things would debatably shape Venezuela over the next century.

[Erika Barras]

The first and most immediate effect of all this oil was the Dutch disease. When something obscenely valuable is discovered in a country, it tends to upend the rest of the economy.

[Kenny Malone]

Like in the Netherlands when natural gas was discovered, international money poured into this new sector, and that raised the value of Dutch currency in the global market, which.

[Erika Barras]

Great, I guess, except no, because that means buying things from the Netherlands becomes more expensive. And so suddenly, the existing industries, often agriculture and manufacturing, they have a hard time competing with other countries.

[Kenny Malone]

Now, in venezuela in the 1920s, it was like Dutch disease on steroids. Remember, they had a coffee industry. Terry Karl explained to us that the oil boom caused the Bolivar, the Venezuelan currency, to skyrocket, which meant Venezuelan coffee was, like, suddenly way too expensive compared to coffee sold by other countries.

[Terry Karl]

So Venezuela loses its entire coffee market.

[Kenny Malone]

So, which is to say, they lose their entire economy up to that point.

[Terry Karl]

They lose it entirely.

[Kenny Malone]

Gone.

[Terry Karl]

Gone. And what replaces it? The export of oil. 1928.

[Kenny Malone]

So in case you just heard a loud thump, that was Terry doing the motion of a switcheroo of commodities, coffee to oil, and whack on the old mic.

[Terry Karl]

And it's astonishing.

[Erika Barras]

The Dutch disease is a less debated prong of a very debated idea called the resource curse. The idea that maybe discovering something like oil is a curse in the long run, because when one resource becomes a country's so solo source of riches, it tends towards things like economic instability, authoritarianism, corruption.

[Kenny Malone]

You'll also hear this called the paradox of plenty. And the evidence for this is spotty as a general rule. But Venezuela has become one of the cases that people point to.

[Erika Barras]

Yeah, once oil took over the Venezuelan economy, there was all this wealth. And one of the big challenges that arises with a petro state like this one is you end up with all the power and wealth concentrated in one set of hands, or in this case, seven sets of hands, the seven sisters. And concentrated power tends to lead to big power grabs.

[Kenny Malone]

And that happened during World War II, when the US needed massive amounts of oil from Venezuela and Venezuela's government realized how much money was leaving its country in barrels.

[Terry Karl]

Venezuelan rulers now are much more savvy about what petrodollars do. And they go, you know, the United States is entering the war and they really need our oil.

[Erika Barras]

At the time, Venezuela's Minister of Development was like, why are these seven sisters making so much money off of our oil? They need us just as much as we need them. This minister, his name was Juan Pablo Perez Alfonso, would eventually change the way the whole, whole world thinks and talks about oil. He was the one who took the first step in Venezuela's long march towards taking control over the country's oil.

[Terry Karl]

This is the beginning of really strong oil nationalism in Venezuela. This is our oil, okay? They're taking it out and using it for war for the developing United States, etc. But this is our oil. So they negotiate what is called the 5050 agreement. The 5050 agreement means we're no longer going to do these little contracts with you and give you some rights and have you take it all. We want 50% of everything you take and 50% of everything you take.

[Erika Barras]

That's a lot.

[Terry Karl]

That's a lot.

[Kenny Malone]

Chevron and the other seven sisters did not like it, but they didn't really have a choice. Venezuela had the biggest and closest foreign source of oil for the us they had the upper hand. So the sisters agreed. And in the not so small print of that agreement was a longer term plan that Venezuela would in fact take over the country's oil completely. It would own everything in 40 years. At that time, if they wanted, the seven sisters would have to negotiate new contracts.

[Erika Barras]

So in the years after the war, oil continued to flow generously and so did money. A lot into foreign hands, but more than ever into the hands of the Venezuelan government. And all that money started streaming into the country. There was new infrastructure, new jobs, a growing middle class, all thanks to oil.

[Kenny Malone]

And these would be the moments in a petro state that seem wonderful, that make people gloss over what could be the downside. Because that single resource just feels like abundance. I mean, it is abundance.

[Miguel Tinker Salas]

Oil was everywhere. You could not escape it.

[Erika Barras]

That is the world Miguel Tinker Salas entered into in the 1950s.

[Miguel Tinker Salas]

I was born in eastern Venezuela in an oil camp named Caripito.

[Erika Barras]

You were born in an oil camp?

[Kenny Malone]

Yes, an oil camp. A company town built by the American company, one of the seven sisters, Creole Petroleum. In fact, we found a little promotional video about their Venezuelan oil operation.

[Miguel Tinker Salas]

The oil beneath these waters belongs to those people. But the stupendous task of bringing it.

[Erika Barras]

To the surface, refining and marketing has been the work of private foreign capital and engineering genius, much of it North American.

[Kenny Malone]

Miguel's Mother worked at the Creole Petroleum Hospital. His father worked at the ports on the docks in the refinery.

[Miguel Tinker Salas]

My father was not in the upper echelons of the oil industry. He worked in the docks with his hands. He would leave in the morning early and come back sometimes by four o' clock covered in oil. My mother would have to wash him down with kerosene to get the oil stains off. I recall that very vividly as a child seeing him having to clean all the oil off of his body and off of his clothes.

[Kenny Malone]

And even at that age, Miguel says he could see the profits from the oil were not necessarily being distributed equally across the country.

[Erika Barras]

In the camp, Creole Petroleum defined everything about the lives of the people who lived there.

[Miguel Tinker Salas]

It was this city within a city, a state within a state that operated independently of the larger society in Venezuela. It was this American US enclave. You had the professional senior staff camp, you had the junior staff camp, which probably meant mostly Venezuelan professionals. Each one had their own social club, each one had their own residential area.

[Kenny Malone]

This single resource fueling the entire country's economy meant that Venezuelans were completely at the mercy of these oil companies. Though by the 1960s, Juan Pablo Perez Alfonso had become the oil Minister of Venezuela, he was working on a way to expand Venezuela's power even further by banding together with other petro states like Iran, Iraq, Saudi Arabia, Kuwait. He didn't want them to compete with each other and he said that they should standardize how oil is bought and sold. They became an oil cartel.

[Erika Barras]

That was the beginning of opec, the Organization of the Petroleum Exporting Countries. They said, we're going to agree on how much oil to produce. And by doing that, they set a price. At the opening speech of an early OPEC conference in Caracas, Juan Pablo spoke to his fellow founding members. He tells them, we can't ignore the low price we're charging to rich countries for our finite resources. He says, we can't let our chance to rise out of poverty just slip away from us.

[Kenny Malone]

Now the OPEC countries were setting the rules, not the multinational oil companies like Chevron.

[Erika Barras]

But Venezuela and all the petro states were still at the mercy of big swings in demand for oil, whether driven by supply or by politics.

[Miguel Tinker Salas]

So Venezuela constantly went through a period of boom and bust cycles.

[Kenny Malone]

Boom and bust. Monoeconomic vulnerability, a classic feature of a country with a resource curse, many would argue.

[Erika Barras]

Yep, Miguel would grow up to be a Venezuelan historian, mostly here in the US but in the 70s, he was still in Caracas for one of the biggest booms Venezuela experienced at the time.

[Kenny Malone]

Because of politics, the US was not getting oil from Arab countries, which meant it was paying oodles of money to Venezuela for oil. And with that agreement to share at least half their profits with Venezuela's government. It was boom, boom, boom time, baby.

[Erika Barras]

Yeah.

[Kenny Malone]

Caracas, the swinging city of Venezuela. Good climate, fine buildings, wide highways with plenty on them.

[Marco (Producer or Host Assistant)]

All in all, a pretty nice place.

[Kenny Malone]

To be for many reasons.

[Miguel Tinker Salas]

You had freeways, high rise structures, you had American style department stores. We had the Concorde landing in Venezuela with direct flights to Paris.

[Erika Barras]

The Concorde. Wait, wait, what was the Concorde doing there?

[Miguel Tinker Salas]

It was flying from Caracas to Paris. Some people could take flight flights on Friday and be in Miami in a couple hours, spend the weekend shopping, return to Caracas on Sunday.

[Kenny Malone]

Now, while this was all happening, Venezuela was taking the next step on its march towards nationalization. In 1976, Venezuela made good on its promise to fully take over the ownership of its oil from the multinational corporations. No more. 50, 50 agreement.

[Erika Barras]

A new company, Petrolios de Venezuela, known as Pedevesa, would be in charge of all the oil. Venezuela said, we're the boss now.

[Kenny Malone]

The foreign companies could stay, but under strict rules, they would essentially be contractors of the state run oil company.

[Erika Barras]

So under this new arrangement, Chevron and Exxon and all these big oil companies remained, but they were more than ever beholden to Venezuela and sharing more profits.

[Miguel Tinker Salas]

Than ever during the period known as La Venezuela Saudi or Saudi Venezuela.

[Erika Barras]

Saudi Venezuela. Like Saudi Arabia? Saudi Venezuela?

[Miguel Tinker Salas]

Saudi Arabia, Yes, Saudi Venezuela. Where the slogan was, it's cheap, give me two because I can afford it.

[Kenny Malone]

It was actually around this time that Stanford political economist Terry Karl first went to Venezuela as a graduate student.

[Terry Karl]

Oil funds are just pouring into the country. There's so much money around that you can't even believe it. Everybody's wearing gold, everybody has three cars, you know. I went to the inauguration of a book by one of the famous economists of Venezuela and to baptize the book they poured an entire bottle of scotch. What and scotch was like back then? Back then, this was a lot of money, Terry.

[Erika Barras]

This was wild.

[Terry Karl]

So this is wild. It's a wild time, right?

[Erika Barras]

Terry told us that a close personal friend of the then president was flaunting the tools of oil extraction.

[Kenny Malone]

He said, lover. She said, it was the lover.

[Terry Karl]

His lover used to wear a gold chain around her neck with a huge gold derrick, you know, inner cleavage.

[Kenny Malone]

So Venezuela was richer than ever. But there was one problem. Those riches were being mismanaged, many would argue. Terry told us this story of a visit with Juan Pablo Perez Alfonso, that key oil minister who had driven so much of Venezuela's oil policy in the past. Juan Pablo was out of office at this point, and when Terry told him that she was planning to do some research on opec, Juan Pablo told her, no, no, look elsewhere.

[Terry Karl]

I said, okay, so what will you have? What would you have me study? And he said, study what oil is doing to us in Venezuela. Es el excremento del diablo, which means it's the devil's excrement.

[Erika Barras]

Oh, yeah. Yes, yes, yes, yes.

[Kenny Malone]

That one translates pretty clearly.

[Terry Karl]

And I just went, what are you talking about? And I couldn't get his phrase out of my mind. So I kept going back and I started to see Venezuela as he saw.

[Erika Barras]

It over the next couple of decades, what she saw, a near nationalized oil industry that was rife with corruption, waste, inefficiency.

[Terry Karl]

They were using it as sort of the goose that laid the golden eggs, but they were slowly killing the goose.

[Kenny Malone]

Corruption is another classic feature of the resource curse. And Terry was seeing some of this up close.

[Terry Karl]

The money is flowing, but not necessarily where they say it is. For example, there's an area of Venezuela that floods six months out of the year, and that then all the waters recede and it's desert.

[Erika Barras]

It's not habitable. It was full of crocodiles. And the President at the time told her they had this major infrastructure project there to make it habitable and fertile and all kinds of extra exciting stuff. So Terry wanted to go check it out.

[Terry Karl]

I actually went by horseback to that area, and I got out there, and there was absolutely nothing there.

[Kenny Malone]

Huh?

[Terry Karl]

Nothing. Not the beginning of infrastructure, not anybody measuring anything. Nothing.

[Erika Barras]

Just nothing.

[Terry Karl]

So I don't know where that contract money went, but I know it didn't go to where it was supposed to.

[Kenny Malone]

The most striking thing she saw out there was what looked like a big old tire on the ground.

[Terry Karl]

And my horse was rearing and screaming, and somebody was screaming at me. Anaconda. Anaconda. I thought Anaconda was the name of a copper company.

[Erika Barras]

No.

[Terry Karl]

So I missed exactly what was going on. And this big inner tube was, in fact, the biggest snake I've ever seen in my. And most dangerous snake I've ever seen in my entire life.

[Erika Barras]

I'm glad you're still with us, Terry. I'm glad you're still with us.

[Kenny Malone]

In Terry's defense, it is the name of a copper company. And the groundbreaking ice cube movie Anaconda had not come out yet. So how was she to know she couldn't have known.

[Erika Barras]

One way to understand the impact of Venezuela's resource curse is that it wasn't only the government that became corrupt. Everyone knew the oil money was plentiful, so they didn't bother to develop other sources of income. Oil created complacency across the country. Everybody was just tapping the oil well.

[Terry Karl]

If you were gonna be a construction company, the cost of building a house you would probably ask for three times from the government the cost of what it really cost. It's a system of distribution.

[Erika Barras]

So everyone was kind of playing this game like everyone's playing the companies.

[Terry Karl]

That's why I knew it was gonna come apart, because this game doesn't last.

[Erika Barras]

After the break, how Venezuela went from a swinging money flinging economy to what it is now.

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[Erika Barras]

By the 1970s, oil had turned Caracas into a booming metropolis where the scotch flowed and the rich rocked their oil derrick necklaces. But Venezuelan historian Miguel Tinker Sala says there was another side to it.

[Miguel Tinker Salas]

Poverty was everywhere. Caracas was ringed by what was euphemistically called ranchos or ranches, which were in fact cardboard neighborhoods. A song by Ali Primera called Casas de Carton Houses of Cardboard was playing at this time.

[Kenny Malone]

In the 80s, oil prices dropped. Venezuela's boom turned again to bust. And some Venezuelans continued to expect oil fueled handouts from its oil rich government. But but the well was simply dry. Or maybe not dry, but worth a lot less. There were massive cuts to services and subsidies.

[Miguel Tinker Salas]

And when that happened in 1989, there was a massive protest known locally as El Caracaso.

[Kenny Malone]

Protesters and looters are out on the streets of the Venezuelan capital Caracas. Ordinary Venezuelans, many of them residents of the poorest neighborhoods that surround the capital, are venting their anger.

[Erika Barras]

Miguel says the Caracasso was a turning point.

[Miguel Tinker Salas]

You had the rise of new political forces, new political arrangements that claimed that they would solve Venezuela's long term problems.

[Kenny Malone]

In the 1990s, Venezuelan leaders moved to save its oil economy by encouraging the foreign oil companies to come back and giving them better contracts.

[Erika Barras]

It was called Apeltura.

[Kenny Malone]

The opening and that did keep oil money flowing. But the Venezuelan masses were still not getting what they wanted. Their discontent continued to grow. And that ushered in a new political force. Hugo Chavez.

[Erika Barras]

In 1999, Hugo Chavez was inaugurated as president. He says, God bless the people of Venezuela, living a resurrection of the country. And he told Venezuelans, we Venezuela, we were rich, now we aren't. Where has all that money gone? He starts redistributing oil profits to poor people. And over the years he takes tighter control of the oil industry and ultimately he just takes it over completely. He says, you oil companies, you don't sell oil to us. It is just ours now. Your employees ours, your equipment, ours.

[Kenny Malone]

By that time, there were just three American companies left and two of them, Exxon and Conoco. They were like deuces, adios, no mas.

[Erika Barras]

Leaving just one American oil company which worked out a deal with Chavez and.

[Miguel Tinker Salas]

Stuck it out Chevron state. Chevron agreed.

[Erika Barras]

Why did they make that choice?

[Miguel Tinker Salas]

I believe it's because they saw Venezuela as a long term investment, not a short term investment. It didn't make any sense. It didn't make any sense. But with the exit of the other companies, Chevron shines.

[Kenny Malone]

Yeah.

[Erika Barras]

When Venezuela's economy started flagging, Chavez realized he needed foreign help with oil production. He looked around and there's Chevron. Chevron got a contract to keep drilling, keep exporting. Chevron has somehow managed to walk the line between the Venezuelan government, its oil fields, and the US government.

[Kenny Malone]

As Chavez's power grew and then Nicolas Maduro took over in 2013, the US's relationship with Venezuela soured. The US sanctioned Venezuelan oil, the Venezuelan economy tanked. It was plagued by hyperinflation. And still Chevron has managed to negotiate these delicate deals with both Venezuela and the US government to stay in Venezuela and keep exporting its oil.

[Miguel Tinker Salas]

And the other argument that they kept making to the US when they wanted to have their license renewed is if we leave, the Chinese step in. So that there was an argument being made that Chevron's presence had both a geopolitical interest as well as an economic interest. And to the extent that you had Chevron, an American company, in Venezuela, you had an American footprint.

[Erika Barras]

The idea is like, well, if we leave, we're clearing the way, so you may as well allow us to keep operating.

[Miguel Tinker Salas]

That was their argument that they made to the United States government, to the Treasury Department, and to the Trump administration, and to other administrations to ensure that their license would be reduced, renewed.

[Kenny Malone]

Chevron has continued its work in Venezuela. It employs around 3,000 Venezuelans and produces about a quarter of all of Venezuela's oil. Around several hundred thousand barrels of oil a day, all of which comes to the United States.

[Erika Barras]

So you can see why Chevron was the only American company that was well placed when Trump announced that the US is now running Venezuela and taking over its oil. And you can see why when President Trump excitedly suggested to all the other major American oil CEOs that they invest billions back into Venezuela, the excitement was not exactly mirrored back. This is how the CEO of Exxon responded.

[Miguel Tinker Salas]

If we look at the legal and.

[Kenny Malone]

Commercial constructs and frameworks in place today.

[Miguel Tinker Salas]

In Venezuela today, it's uninvestable.

[Kenny Malone]

Yeah, perhaps not the celebratory reaction Trump was looking for. And you know, from Exxon and Conoco's perspective, they say they are still owed billions of dollars that Venezuela took from them two decades ago.

[Erika Barras]

Also, Venezuela's oil fields have gotten less productive. It is harder to get oil out of them. And it would take more than $100 billion to get the oil industry in Venezuela back to where it was. Is the equipment up to date?

[Miguel Tinker Salas]

No, it's not. The equipment is in deplorable conditions in my hometown of Caripito. It's incredible. The what was left of the industry has been stripped down. The metal has been sold in some, some areas for recycling. The wires have been taken out of the building, the windows have been taken out of the buildings. They have, they have stripped it because when you have difficult conditions, people will do whatever it takes to survive.

[Kenny Malone]

Also worth mentioning, about 8 million Venezuelans have left the country since 2014. Some of those were people that had knowledge of the oil industry. You might miss them if you're trying to get that industry up and running again.

[Erika Barras]

Right. So almost no one is set to win right now except Chevron.

[Miguel Tinker Salas]

And Chevron stands the benefit today from the so called negotiations that Trump has been having with oil companies because it's on the ground and it can expand the quickest. It knows the fields, it knows where the production sites are, it knows where it can tap into the to the petroleum. Whereas the other companies would have to start in many ways fresh.

[Erika Barras]

But even if Chevron or any of the oil companies step up and make the oil flow again, we don't know what that will actually mean for Venezuela. It's a petro state and our political economist Terry Carl says it in a petro state, it really all comes down to how the people in power decide to handle the riches from their resource.

[Kenny Malone]

In fact, this is why Terry told us she does not like the term resource curse with regards to oil.

[Terry Karl]

I call it the political resource curse because a resource doesn't have a curse. It's just black, viscous stuff, you know, it's just a liquid. It doesn't have a curse or a blessing. It's how you use it. And that is about human beings.

[Kenny Malone]

Human beings in political offices in C Suites. The blessing or the curse is in their hands. This episode was produced by Luis Gallo with help from Samuel A. Horse Kessler. It was edited by many Marianne McCune, fact checked by Cierra Juarez and engineered by Sina Lofredo. Alex Goldmark is our executive producer. Also, Scotch rules.

[Miguel Tinker Salas]

Well, you want to get into that? We can get into that.

[Erika Barras]

What was the deal with Scotch?

[Miguel Tinker Salas]

It's a status symbol.

[Erika Barras]

Scotch did not sponsor this episode. I'm Erica Barras.

[Kenny Malone]

I'm Kenny Malone. This is npr. Thanks for listening.