Index
“Uninvestable” May Be The Word Of The Year
13 January 2026
Peter Coffee
Much in the news, since January 3, have been questions concerning Venezuelan oil. Most of those questions should be categorized under “What’s the least bad way to do this?” – since, as Peter Drucker (and others in similar words) have long observed, there is no right way to do the wrong thing.
I might surprise you by inviting the head of ExxonMobil to testify on this point, but Darren Woods may have given us an early candidate for Word of the Year for 2026 when he said last week that the country was “uninvestable.” Woods has specifically mentioned “weak legal protections, restrictive hydrocarbon laws, and a history of asset seizures” as deterring factors, but why stop there? There are plenty of other reasons not to do this.
For one thing, people talk about Venezuela having “enormous oil reserves…one of the largest hydrocarbon resource bases in the world,” but “reserves” does not just mean “what’s there.” The phrase that makes things happen, “proven reserves,” combines two requirements:
what’s technically recoverable, meaning that it could be extracted “from well established or known reservoirs with the existing equipment and under the existing operating conditions” – but there is also the question of,
what’s economically recoverable, meaning that it wouldn’t be a money-losing proposition to go after it. Note that when the U.S. Geological Survey called Venezuela’s Orinoco Oil Belt “one of the world’s largest recoverable oil accumulations,” their document [PDF] warned that “No attempt was made in this study to estimate economically recoverable resources or reserves…no time frame is implied other than the use of reasonably foreseeable recovery technology.” (N.B. – they didn’t say “existing,” only “foreseeable.”)
If you don’t want to read more than a few short phrases, I’ll just quote an influential non-expert on the subject (currently claiming to be the “acting president of Venezuela”) – who in 2024 “called the country’s crude ‘horrible,’ ‘tar,’ ‘the dirtiest stuff you can imagine,’ and the ‘worst oil probably anywhere in the world.’” Or we could quote experts, who observe that a better word for the stuff under Venezuela would be “bitumen”: “a highly viscous, complex hydrocarbon contained within an oil sands formation” that is “almost solid at room temperature.” One qualified commentator says that
Most of it comes out of the ground with the consistency of cold peanut butter. To even move it through a pipe, you must mix it with costly imported diluents (such as naphtha), which adds roughly $15 per barrel to your costs before you’ve even reached a port. And when it gets onto a tanker, it’s still some of the hardest crude on the planet to turn into something useful.
Further, this fun fact: of the massive naptha input needed to make Venezuelan oil transportable (which still doesn’t necessarily mean “investable”), more than half comes from Russia and China. What could possibly go wrong? This is one of many times when the phrase “supply chain” understates the complexity of the interconnections that make everyday products seem effortlessly available. The closer we look, the more challenges we see, which is why I call them not simple “chains” but rather “fractal maps.”
Looping back to ExxonMobil’s Darren Woods, though, we get another phrase that might be even more important than whether the proposition is “investable.” Woods also referred to what his company does as a “depletion business”: he said that its product “is in great demand and will be in demand for many, many, many decades to come,” but the existence of a demand curve merely means that there is some quantity that will be bought at some price. The same is true of buggy whips or slide rules, but neither represents what anyone would call a sizable opportunity for investment.
Unlike the marginal solar panel or wind turbine or geothermal system, whose unit costs generally decline with growing scale and improving technology, the next barrel of oil that’s produced will almost inherently cost more than the one before – because if that weren’t so, the “next” barrel would have been produced first. Again, I’m not seeing a great opportunity for investment – to produce a low-quality product, from an expensive place, to sell into a shrinking market? No, thank you.
Sometimes, all you need to do is a little math.