As President-elect Donald Trump prepares to return to the White House with promises to slash energy costs and increase global oil supply, a stark warning from the leader of the Western world’s largest oil company is tempering expectations for a quick fix at the pumps for Detroit drivers.
Exxon Mobil CEO Darren Woods recently characterized Venezuela as “uninvestable,” casting doubt on the incoming administration’s strategy to potentially ease sanctions on the South American nation to flood the market with cheap crude. For the automotive capital of the world, where fuel prices dictate everything from consumer vehicle choices to logistics costs, the disconnect between political ambition and corporate reality presents a complex economic forecast.
While the Trump transition team has signaled a “Drill, Baby, Drill” approach intended to lower inflation, major energy players warn that Venezuelan oil fields—once the envy of the global market—are decades away from meaningful recovery. This divergence has significant implications for Michigan’s economy, the strategic planning of Detroit’s Big Three automakers, and the wallets of local residents.
The ‘Uninvestable’ Verdict: A Reality Check for Global Supply
In recent comments reported by major financial outlets, Exxon’s Darren Woods was blunt about the prospects of Venezuelan oil returning to the market in volumes significant enough to impact global prices. Despite holding the world’s largest proven oil reserves, Venezuela’s infrastructure has crumbled after years of mismanagement and strict U.S. sanctions.
Woods noted that without a predictable legal framework and massive capital injection, the country remains too risky for major Western investment. This stands in contrast to the geopolitical maneuvering expected from the incoming Trump administration, which has hinted at leveraging Venezuelan supply to undercut global prices and reduce reliance on adversaries.
For energy analysts, the message is clear: political will alone cannot extract oil. “The industry runs on certainty and infrastructure, neither of which currently exists in Venezuela,” noted a recent report from the U.S. Energy Information Administration (EIA). Even if sanctions were lifted immediately on Inauguration Day, experts estimate it would take five to ten years to restore Venezuela’s production to pre-collapse levels.
What This Means for Detroit Automakers
The tension between the White House’s energy goals and Exxon’s risk assessment creates a volatile environment for Detroit’s automotive industry. General Motors, Ford, and Stellantis are currently navigating a delicate transition period, balancing the production of internal combustion engine (ICE) vehicles with a slower-than-expected adoption of electric vehicles (EVs).
If the Trump administration’s plan to lower gas prices relies heavily on bringing offline supply sources like Venezuelan oil back online quickly, and that supply fails to materialize, gas prices could remain higher than the administration promises. High fuel prices historically dampen sales of high-margin trucks and SUVs—the bread and butter of Detroit manufacturing.
“Stability in energy prices is arguably more important to the Big Three than the absolute price itself,” said a local automotive supply chain analyst. “If Exxon is saying the supply chain isn’t there, automakers have to assume fuel volatility will continue. That makes it harder to plan production schedules for the heavy-duty trucks built right here in Michigan.”
Furthermore, as discussed in our coverage of Detroit’s shifting EV strategies, uncertainty in the oil market often forces automakers to hedge their bets, maintaining dual supply chains for gas and electric powertrains, which increases operational costs.
Impact on Detroit Residents and Commuters
For the average Detroiter, the geopolitical standoff over Venezuelan oil might seem distant, but the downstream effects are felt at every intersection in the city. Michigan drivers have seen gas prices fluctuate wildly over the last 24 months. The promise of $2.00/gallon gas—a talking point of the recent campaign—relies on a surplus of global crude.
If Exxon and other supermajors refuse to engage with Venezuela, supply constraints could keep prices in the Midwest hovering near current averages rather than dropping significantly. For Detroit residents, particularly those in neighborhoods with limited public transit options who rely on personal vehicles for work, this means the relief promised by the new administration may be delayed.
According to data from AAA Michigan, the average price for a gallon of regular unleaded in Metro Detroit has remained sensitive to global speculation. If the market realizes that Venezuela is indeed “uninvestable” and cannot act as a relief valve for global supply, speculation could drive prices up, eating into the disposable income of local households.
The Infrastructure Hurdles
The skepticism from Exxon stems from physical realities that mirror some of Detroit’s own historic challenges with infrastructure. Much like restoring a blighted factory requires more than just unlocking the doors, restoring Venezuela’s oil output requires rebuilding power grids, pipelines, and refineries from scratch.
Industry reports suggest that Venezuela’s oil is heavy and sour, requiring specialized refining capacity. Many Gulf Coast refineries are designed to handle this type of crude, but without the raw material arriving, these refineries operate at lower efficiencies. This bottleneck prevents the kind of immediate price drop the Trump administration is seeking.
This situation highlights a critical aspect of the energy debate: corporate strategy often moves slower than political cycles. While the White House operates on four-year terms, companies like Exxon Mobil plan in decades. Their refusal to pivot back to Venezuela suggests they do not see a stable future there, regardless of who sits in the Oval Office.
Future Outlook for Michigan’s Energy Economy
As the inauguration approaches, all eyes in Detroit’s business community will be on how the administration reacts to the oil industry’s hesitation. Will the administration offer incentives to de-risk investment in Venezuela? Or will they pivot to domestic production incentives that could boost jobs in American energy sectors, potentially benefiting Michigan’s industrial base indirectly?
For now, the “uninvestable” label sticks. Detroiters should remain cautious about expecting an immediate plummet in gas prices in early 2025. As we analyzed in our report on Michigan’s 2025 economic outlook, energy costs remain the wildcard in the fight against inflation.
The standoff between Exxon’s prudence and Trump’s policy ambition serves as a reminder: in a global economy, local prices are often dictated by decisions made in boardrooms and oil fields thousands of miles away from the Motor City.