recovery

CHICAGO — President-elect Bill Clinton used a community college in Chicago Monday to try out an updated economic message that Americans will be hearing frequently from him in the weeks to come: We’re not out of the woods yet.

“When you read that things are getting better with the unemployment rate, inflation rate, housing starts, things of that kind, that’s a good thing,” Clinton told an audience of some 150 students at Wilbur Wright Community College on this city’s northwest side. But, he warned, those improvements are merely part of the short-term business cycle.

“Underneath that,” he said, are “20 years of problems.”

“We may or may not be coming out of the recession,” Clinton said. “There are some good indicators that we are, but the long-term problems are there and that is what I have to address.”

Clinton’s statements reflect a basic dilemma that he faces: He relied on a bad economy to help him get elected. And while he would like to see improvements, he must rely on continued worries about the economy to get his programs enacted over what is certain to be fierce opposition from vested interests in Washington. In addition, of course, having defeated President Bush on the issue of the economy, Clinton would like to be able to say that economic improvements occurred on his watch, not on that of his predecessor.

With the economy showing steady signs of improvement, those factors have impelled Clinton and his aides to try with increasing diligence to focus public attention on the long-term trends of economic stagnation–and his long-term agenda to change them–rather than on talk of a short-term stimulus to help an economy that may well be moving out of recession on its own.

The emphasis on the long-term agenda will be central to the economic conference that Clinton plans to convene in Little Rock next week. Aides envision the conclave in large part as a tutorial to explain to Americans why the country needs Clinton’s agenda of raising taxes, revamping the health care system, and increasing spending on education, training and new technologies to reduce the deficit.

In answering questions from the students, Clinton provided the most detailed view since the election of how he intends to form a coherent agenda out of the many promises he made in the campaign.

Repeatedly he referred to two key proposals: His plan for a national service trust fund to let Americans finance their educations by borrowing money and paying part of it back through public-service work, and his plans to reform the nation’s health care system.

Changing the health care system is the one thing that he would do “if I could wave a magic wand,” Clinton said, reminding the students of the effect that rising health care costs have had on the ability of American companies to compete.

At the same time, the session with the students showcased a shift in Clinton’s rhetoric from the language of the campaign to the sterner realities of governing. During the campaign, Clinton struggled against his natural tendency to give four-part answers to all questions. Now he appears to have given up that fight.

And repeatedly, as the students asked Clinton for more federal money for program after program, the President-elect, mindful of the massive deficit he soon will inherit, responded with a polite version of “no.”

One woman asked if he would provide special incentives for minority students to attend college. No, Clinton said, the goal should be to make loans and scholarship funds broadly available and then recruit in minority communities. A nursing student asked about special incentives to encourage people to pursue nursing careers. No, Clinton replied, noting that nursing salaries have gone up because of shortages.

Still another noted that some of the classes he wanted to take have been canceled due to a lack of funds. Could the federal government help? he asked. “The federal government, with the huge deficits we are now facing, does not have the capacity to take over substantial funding of the community college system,” Clinton replied.

Despite that, Clinton seemed to win the student’s enthusiasm simply by having shown up.

“He could have just gone to Princeton or Yale and spoken in their auditorium. Instead he came here,” said Erika Marie Dimitrijevic, a 35-year-old mother who attends an ultrasound training program at the school. “I think he wants to get closer to the people.”

Dimitrijevic is in many ways representative of the school, whose average student is a 31-year-old woman. Roughly 50% of the 14,000 Wright students are white, while 20% are black and 30% are Latino. About 15% are women who head households.

The President-elect also used the occasion to score some points with the area’s political leaders, who were crucial in his battles to win his party’s nomination and to defeat President Bush. They will be equally important to whatever success he manages in the next four years. Clinton took time to meet with Chicago Mayor Richard M. Daley, along with Daley’s brother William, who has been touted in Chicago as a potential secretary of transportation in the Clinton Administration.

And in speaking to the students, Clinton made a point of praising their local congressman, Rep. Dan Rostenkowski, chairman of the House Ways and Means Committee, whose panel will have jurisdiction over much of Clinton’s economic and health care proposals and whose help Clinton has courted assiduously in recent weeks.

If he succeeds in changing the nation’s health care system, “it will be in no small measure because of Danny Rostenkowski’s leadership,” he said.

Later in the day, Clinton arrived in Washington and courted members of Congress by attending a reception for newly elected freshmen.

He will spend most of today on Capitol Hill, meeting with freshmen congressmen again as well as with congressional committee chairmen.

Clinton’s attempts to woo members of Congress, both the powerful and the new, are in sharp–and deliberate–contrast to the approach of Jimmy Carter, the last Democratic President, whose relations with Capitol Hill were tense and troubled. Clinton and his aides, by contrast, have taken every possible opportunity to try to bring members of Congress onto his team, an effort which is likely to include appointing several to his Cabinet.

The first of those expected Cabinet appointments are expected later this week.

As Clinton left the White House guest quarters at Blair House Monday night, en route to a party at the home of Washington Post Co. Chairwoman Katharine Graham, he was accompanied by several members of his transition team and Lawrence Summers, a World Bank economist, who is considered a possible choice for economic security adviser.

After a scheduled return to Little Rock tonight, Clinton likely will resign from the post of governor Wednesday, closing a 12-year chapter of his life. He is also expected to release new ethics guidelines for his Administration.

Researcher Tracy Shryer in Chicago contributed to this story.

The White House’s newly released strategy for tackling the nation’s drug and addiction crisis calls for a number of ambitious public health approaches that some experts say are laudable but will be hampered by the administration’s own actions.

The sweeping 195-page National Drug Control Strategy, published May 4, advocates for making access to treatment easier than getting drugs, preventing young people from developing addictions in the first place, increasing support for people in recovery, and reducing overdose deaths.

Those broad goals are widely supported by public health researchers, addiction treatment clinicians, and recovery advocates.

But accomplishing such goals will be difficult in the face of the administration’s mass layoffs of federal employees, cancellation of research and community grants, attacks on organizations and practices that serve people who use drugs, and cuts to Medicaid, the state-federal health insurance program for low-income people that is the largest payer for addiction and mental healthcare nationwide.

Many components of the National Drug Control Strategy are “things that we would agree with and that we fully support,” said Libby Jones, who leads overdose prevention efforts at the Global Health Advocacy Incubator, a public health advocacy group.

But there are “disconnects in what the strategy says is important and then what they’re actually going to fund,” she said of the Trump administration. “Those inconsistencies feel particularly loud in this strategy.”

The White House’s National Drug Control Strategy, released every two years, is a touchstone document meant to lay out the federal government’s coordinated approach to what in recent decades has been one of the country’s defining problems.

Since 2000, more than 1.1 million people have died of drug overdoses. Although deaths have decreased recently, the numbers remain elevated compared with earlier decades, and research suggests overdose death rates among Black Americans and Native Americans are disproportionately high.

The strategy document published this week is the first of President Trump’s current term. In keeping with the administration’s approach to addiction issues, it places heavy emphasis on law enforcement efforts to reduce the supply of illicit drugs. The document repeatedly refers to the ongoing “war” against “foreign terrorist organizations” — the Trump administration’s term for drug cartels — and touts increased enforcement at U.S. borders.

It also outlines plans to implement artificial intelligence technologies to screen for illicit drugs brought into the country and wastewater testing to detect illegal drug use nationwide.

The second half of the strategy focuses on reducing the demand for drugs through public health prevention efforts, addiction treatment, and support for people in recovery. It promotes the role of religion in recovery and calls for the widespread use of overdose reversal medications, such as naloxone.

In a news release, the White House’s Office of National Drug Control Policy called the document a “roadmap” that will “continue dismantling the drug supply and defeating the scourge of illicit drugs in our country.”

The Trump administration did not respond to requests for comment about how the strategy aligns with its other actions.

In December, Trump signed a reauthorization of the SUPPORT Act, which continues several grants related to treatment and recovery and the requirement for Medicaid to cover all FDA-approved medications for opioid use disorder. In January, he announced the Great American Recovery Initiative, including a $100-million investment to address homelessness, opioid addiction, and public safety.

However, few details have been provided about the initiative, and in January, about a month after the SUPPORT Act passed, billions of dollars in addiction-related grants were abruptly terminated and reinstated within a frantic 24-hour period.

That “whiplash” left “a sense of instability and uncertainty in the field,” said Yngvild Olsen, a national adviser with the Manatt Health consultancy. She led substance use treatment policy at the Substance Abuse and Mental Health Services Administration, or SAMHSA, under the Biden administration and left about six months into Trump’s second term.

That insecurity was exacerbated by the president’s 2027 budget request, which proposes cuts to several addiction and mental health programs and the consolidation of key federal agencies working on those matters. Jones’ group and nearly 100 others in the field have signed a letter asking Congress to reject the proposals, as it did with similar requests last year.

The national drug strategy adds new, potentially contradictory information to this confusing landscape.

Increasing Access to Treatment

One of the most significant public health goals in the strategy, mentioned at least half a dozen times, is to make it easier to get treatment than it is to buy illegal drugs.

National data underscores the necessity: More than 80% of Americans who need substance use treatment don’t receive it.

The administration’s actions on health insurance may make it difficult to improve that statistic.

Medicaid is the main source of healthcare coverage for adults with opioid use disorder. When implemented, the Medicaid work requirements in Trump’s One Big Beautiful Bill Act are projected to strip that coverage from about 1.6 million people with substance use disorders.

The last time Medicaid rolls were purged — after COVID-era protections expired — many people who had been receiving medication treatment for opioid addiction stopped it and fewer people started treatment, according to a study published last year.

Olsen, who is also an addiction medicine doctor, said she loves the strategy’s emphasis on making treatment readily available to anyone who wants it. But she said that’s “hard to really imagine when now people may have to pay for it themselves because they may be losing their Medicaid insurance coverage.”

One analysis estimated the upcoming Medicaid changes could lead 156,000 people to lose access to medications for opioid use disorder and result in more than 1,000 additional fatal overdoses per year.

People with private insurance may be affected too.

The Trump administration has refused to enforce Biden-era regulations aimed at bolstering mental health parity, the idea that insurers must cover mental illness and addiction treatment comparably to physical treatments. And recently, the administration said it would redo those regulations altogether, raising fears that addiction treatment could become increasingly unaffordable.

The administration did not respond to specific questions about how it reconciles its actions on Medicaid and parity with the goal of increasing treatment.

Prioritizing Prevention

The strategy highlights preventing addictions before they begin as one of the keys to reducing demand for drugs. It calls for “promoting a drug-free America as the social norm” and implementing school and community-based programs that are backed by science.

“Investing in primary prevention, before drug use starts, saves lives and resources,” it says, citing several studies about the cost-effectiveness of such programs.

Yet, the president’s budget proposes cuts to these types of programs, and federal layoffs have decimated the agencies that would implement such work.

The White House’s most recent budget request proposes cutting roughly $220 million from SAMHSA’s Center for Substance Abuse Prevention and nearly $40 million from the Drug-Free Communities program.

Since the new administration started, SAMHSA has lost about half of its staff, and the Centers for Disease Control and Prevention is down about a quarter.

“It’s not clear to me that they’re really going to be able to have the funds or the people to be able to carry that out,” Olsen said of the strategy’s prevention goals.

Another wrinkle appears in the strategy’s discussion of marijuana. The document points to marijuana use as one of the drivers of increasing drug use disorders and reports that “convergent evidence from multiple sources” suggests cannabis use increases the risk of psychosis. It calls for developing new tools to treat marijuana withdrawal and addiction.

However, just two weeks ago, the White House moved to reclassify medical marijuana to a lower tier of scheduled substances and is moving to hold a hearing to do the same for marijuana broadly.

“The administration, on the one hand, is moving in a direction of liberalizing access to cannabis,” Jones said, “but at the same time, in the strategy, it talks about the dangers of doing so.”

“There’s a disconnect there that just makes you question: Which one do you believe?” she added.

The administration did not respond to specific questions about its marijuana policies.

Stopping Overdose Deaths

One of the more surprising elements of the National Drug Control Strategy comes in the last paragraph of the final chapter. It focuses on public drug-checking programs, which often involve using test strips to help people who use drugs determine whether there are more-dangerous substances, such as fentanyl or xylazine, in the batch they bought. That helps them determine whether or how to safely use those drugs.

“Rapid test strips and similar technologies that detect fentanyl and other drugs are an important tool that should be legal,” the strategy document says.

However, SAMHSA announced in a recent letter that it would no longer pay for test strips, as part of the Trump administration’s “clear shift away from harm reduction and practices that facilitate illicit drug use.”

The administration has similarly attacked harm reduction programs in an executive order and its budget requests. It did not respond to specific questions about how this position interacts with the drug control strategy.

Regina LaBelle, a Georgetown University professor who served as acting director of the Office of National Drug Control Policy during the Biden administration, wrote about the contradiction in a blog post: “It is the height of rhetoric over reality to champion a tool while simultaneously cutting off the funding used to acquire it.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism.

Venezuela’s recent Hydrocarbon Law reform has sparked fierce debates about its short- and long-term implications. In this essay, Blas Regnault, an energy policy analyst and researcher, offers an in-depth analysis of the new legislative framework, from the significant changes to the state’s governance over its natural resources to his perspective on a sovereign recovery of the oil industry.

The recent hydrocarbon reform: an overview

It is important to distinguish between two closely connected but analytically separate developments: first, US oversight of Venezuelan oil revenues after Maduro’s kidnapping; and secondly, the new Hydrocarbon Law itself. The first is an externally imposed mechanism that conditions oil sales, revenue collection, transport, and the distribution of oil proceeds to US interests. The second is a domestic legal reform whose constitutionality and political legitimacy have been widely questioned.

It remains unclear whether the new law is fully operative in practice, or whether it is only being applied selectively while its fiscal substance is displaced by the US revenue-control mechanism. ^{But the outcome is largely the same: a loss of fiscal automaticity and a form of fiscal sovereignty under tutelage in relation to Venezuelan oil income.}

In other words, the crisis of governance in the Venezuelan oil sector, together with its chronic lack of transparency since 2017, now culminates in a profound loss of sovereign control over all three dimensions of the business: its rentier dimension, belonging to the nation; its fiscal dimension, belonging to the state; and its shareholder dimension, linked to the role of the state oil company PDVSA as principal participant in extraction and commercialisation.

Therefore, the new law is not simply a technical reform. It is not merely about updating contracts, modernising procedures, or making the sector more attractive to investors. The deeper issue is that the reform changes the way the nation is compensated for the use of the subsoil and therefore alters the very governance of the sector. What is at stake is the relationship between sovereignty, ownership of the subsoil, and public income.

It is true that, on paper, the law formally preserves state ownership over the resource. But the business models it opens weaken the practical substance of that ownership. And that is the crucial point. Ownership is not a decorative legal formula. Ownership means that the state, acting on behalf of the nation, has the right to decide whether the resource remains underground or is extracted; and if it is extracted, under what conditions, with what public charge, and for whose benefit. The recent reform softens the link between ownership and the nation’s participation as owner of the subsoil, turning something that was once grounded in a general rule into something negotiable, adjustable, and highly discretionary.

A useful way of understanding the economic and social significance of the reform is to distinguish the different streams of public income historically associated with oil in Venezuela. Under the former hydrocarbon law, the nation participated in the oil business through three distinct channels: as owner, as tax authority, and as shareholder. The first channel, corresponding to ownership, was royalty. The second was taxation, arising from the state’s fiscal authority over the activity. The third was dividends, arising when the state participated through PDVSA and therefore received income in its capacity as stakeholder rather than as landlord or tax authority.

This distinction matters because the oil business has historically involved different claimants competing over the fruits of extraction. In a sector marked by extraordinary profitability and strategic importance, the owner of the rent, the fiscal authority, and the capitalist operator all seek to maximize their share of the value generated. In the Venezuelan framework that prevailed before 2026, those three roles were clearly present: the nation as owner of the subsoil, the state as fiscal authority, and the operator as capitalist actor. The new law alters the balance between them.

Royalty

The royalty is where the change is most revealing. As already noted, royalty is the clearest expression of ownership. It is paid upfront. It does not depend on profit. It is charged before taxes are assessed and before the remaining income covers the factors of production; that is, wages, interest, profits, and the other claimants on the project. In other words, royalty is not part of the production costs. If the oil price is 100 dollars per barrel and the agreed royalty rate is 30 per cent, the owner receives 30 dollars per barrel straight away. That is the proprietorial logic in its purest form.This has long been a battleground in the global oil industry. The dispute over rent has historically taken place between the operating companies, whether private national oil companies acting as operators, and the owner of the resource, that is, the landlord. Depending on the property-rights regime, that owner may be a private individual, as in parts of Texas, or the state, as in Venezuela and in most oil-exporting countries. Whether in Texas, Alaska, Saudi Arabia, Kuwait, Norway, the United Kingdom, Nigeria, or Venezuela, the property-rights regime has been the principal legal instrument through which the owner secures a share of the rent. It is a legitimate exercise of sovereignty, recognised by all parties involved in the global oil business.

And yet the new law, in practical terms, empties out that proprietorial logic by turning royalty into a negotiable variable within a range of zero to 30 per cent, something highly unusual in the global oil business. The potential scale of the loss becomes immediately clear once one thinks in terms of export volumes. At an oil price of 86 dollars per barrel, a 1 per cent royalty leaves the nation with less than one dollar per barrel, whereas a 30 per cent royalty yields 25.8 dollars. If Venezuela exports 800,000 barrels per day, that means roughly 688,000 dollars per day under a 1 per cent royalty, compared with 20.64 million dollars per day under a 30 per cent royalty. This is a dramatic compression of the owner’s income. It shows that a high oil price cannot compensate for the hollowing out of the royalty. Put simply, under the new law, higher oil prices will no longer automatically translate into greater income for the nation if royalties are arbitrarily lowered to the benefit of transnational capital. This is not a marginal fiscal concession; it is a radical compression of the nation’s proprietorial income. 

Taxes

Turning to taxes, under the previous legal framework, the fiscal regime included not only taxes on profits, but also local and municipal taxes on oil activity, together with other parafiscal charges and special contributions linked to extraordinary profits. These different channels gave the public side several routes through which to capture value from extraction. Under the new law, much of that architecture is displaced and compressed into an integrated tax on gross income that will also be set in a discretionary fashion up to a fixed ceiling. According to supporters of the reform, this new framework is designed to ensure the project’s “economic equilibrium.” But the political significance of that shift is considerable. What was previously structured through several distinct legal claims can now be more easily absorbed into a flexible package, negotiated project by project. In that sense, this is not simply simplification; it is a substantial thinning of the fiscal claim. Once the fiscal architecture becomes thinner, the public claim over oil value becomes weaker, more flexible, and ultimately more negotiable.

Table 2 illustrates the magnitude of the change using the March 16, 2026, marker Merey 16 price. Under the previous regime, taxes and parafiscal charges alone could amount to about $31 per barrel, or 36 percent of the barrel price. Under the post-reform interim scenario, that could fall to about $17.6 per barrel, or 20.5 percent.

Dividends

Finally, there are dividends arising from state equity participation, and these too must be distinguished from both royalty and taxation. Dividends are not paid because the nation owns the subsoil, nor are they collected because the state exercises fiscal authority over the activity. They arise because the state participates in the business as shareholder and therefore receives part of the profits in its capacity as investor. In other words, dividends represent the state’s participation in the profits of the business itself. But that income is not necessarily available for immediate public use in the same way as royalty or taxation. Part of it may be retained within the company, used for reinvestment, capital expenditure, debt service, or the wider financial needs of the enterprise. So, unlike royalty, which expresses ownership, or tax, which expresses fiscal authority, dividends are tied to the corporate logic of the business. Depending on the ownership structure, this channel of participation may range, illustratively, from zero to 60 per cent of distributable profits.

International jurisdiction of potential oil litigation

There is also an important jurisdictional dimension. By reducing the fiscal share captured by the state and by placing greater weight on contractual flexibility, the reform moves the sector towards a framework that is more exposed to international arbitration. At the same time, the sanctions and licensing regime has become part of a broader architecture of control over the oil business: control over access to the fields, control over marketing channels, and control over financial access to revenues. So, this is not merely a domestic fiscal reform. It is also part of a broader reordering of the legal and financial chain through which Venezuelan oil is governed.

Key takeaways

Supporters of the new law argue that it delivers increased flexibility, greater operability, improved investment prospects, and greater bankability. And that is not a trivial argument. In a country that has experienced production collapse, sanctions, institutional erosion, and a loss of market share, it is understandable that policymakers would seek a framework that appears more attractive to capital. In that sense, the reform may indeed reduce perceived risk and make projects easier to finance. It may also simplify part of the gross take and make negotiations easier. In that sense, the reform should not be caricatured. But it also entails the abandonment of each of the nation’s and the state’s historic roles in the sector, undermining the institutional fabric that once gave the oil economy a degree of stability and rationality.

For that reason, the disadvantages of the reform ultimately outweigh its potential benefits. What is lost is fiscal automaticity. That means the nation is no longer guaranteed a stable share by rule, but must now negotiate it, justify it, or recover it through more uncertain channels. Put differently, the reform replaces payment-by-rule with payment-by-negotiation on a case-by-case basis. In practical terms, each contract will generate its own conditions over each of the principal sources of public income arising from oil activity.

What is also lost is the clarity of a system in which the state charges because it owns the resource, not because the project happens to be commercially convenient. Once royalties become variable and fiscal terms are subordinated to the “economic equilibrium” of the project, the centre of gravity shifts. The guiding principle is no longer the nation as sovereign owner; it becomes the financial viability for the investor/operator. That is a profound political change presented as technical pragmatism.

In summary: the 2026 reform does not abolish formal ownership, but it hollows it out in practice. It replaces a more proprietorial fiscal logic with a more contractualized and discretionary one. That may attract investment, but it also weakens the automatic link between national ownership and national income. Whatever mechanism one chooses to emphasize, the result is much the same: 

• The nation no longer receives royalty by rule, but under externally conditioned arrangements. What is presented as flexibility is a retreat from ownership. 
• The state compresses its fiscal participation at every level. 
• The state oil company weakens its position as an investor. 

Once that happens, the central question is no longer simply, “How much is the state collecting?” but rather “Who decides, under what rules, with what traceability, and with what accountability?”

The historical context of Venezuela’s oil legislation

Venezuela’s oil history is not just a history of contracts or companies; it is a history of how the nation has tried to define its authority over the subsoil. Venezuela did not begin from the same position as many oil-exporting countries in West Asia or North Africa. It was already an independent republic when it developed its mining and hydrocarbons legislation. That matters, because it means Venezuela built a national jurisdictional framework around state ownership of mines and deposits, rather than inheriting a colonial concessionary order imposed from outside. That distinction is central.

From the early twentieth century onwards, successive legal frameworks progressively consolidated the republic’s sovereign claim over oil-bearing land. In other words, Venezuelan oil law was historically moving towards a more explicit assertion of the nation’s right to charge for the extraction of its natural wealth. This is one reason Venezuela mattered so much internationally: not only because it was a major producer, but because it became a reference point for fiscal regimes and sovereign oil governance, including later in the wider OPEC environment. In that sense, Venezuela’s experience was historically complete in a way that few other oil-producing countries were.

Nevertheless, there is a paradox surrounding the 1975-1976 nationalization of the oil industry. On paper, it ought to have marked the culmination of national control, but it did not deepen sovereignty. In practice, it helped produce a shift towards a more internationalized governance structure. The Ministry, as representative of the owner-nation, was gradually displaced by state oil company PDVSA, and PDVSA increasingly operated under a logic of global business rather than one of public sovereign rule. So instead of the owner-state speaking directly, the national oil company became the intermediary, and that had long-term consequences. Put differently, PDVSA, together with international oil capital, gained ground in the long struggle to reduce the landlord’s direct grip over rent.

This is where the historical relationship with Western transnational corporations becomes more nuanced than a simple story of foreign domination versus nationalist resistance. The issue is not merely the presence of Western companies, but the governance structures they operate under. Venezuela moved from a more classic proprietorial regime towards a more cessionary one, and later, especially in the late 1980s and 1990s, towards more liberal or non-proprietorial arrangements. The oil opening (“Apertura Petrolera”) of the 1990s is especially important here, because it reduced the fiscal burden and shifted the framework in a way that centralized the operator’s conditions. That was already a major break.

The Chávez years brought a partial reversal. The restoration of the property right was not merely ideological posturing; it was a restoration of a more classical fiscal logic, in which the sovereign character of the state take was reaffirmed. But that restoration took place amid other contradictions, including the politicization of PDVSA and the accumulation of debt. So even that phase did not resolve the deeper institutional tensions.

The 2026 reform, then, does not emerge from nowhere. It is a new chapter of a long historical movement: from national jurisdiction, to nationalization, to cessionary governance, to the oil opening, to partial reassertion, to crisis and collapse, and now to a new form of contractualization from a position of weakness. Venezuela’s oil history has been a struggle not simply over who owns the oil, but over who governs the terms on which ownership is exercised. The present reform is the latest chapter in that struggle, but it is a particularly radical one because it comes after institutional erosion and under a global order that is far more contractual, litigious, and externally structured than the one Venezuela faced in the mid-twentieth century.

Oil in the present geopolitical battle

The current geopolitical context of the US-Israeli aggression against Iran should, in principle, strengthen Venezuela’s bargaining position. When West Asia becomes more unstable, supply security rises as a strategic concern, and oil regains immediate geopolitical urgency, countries with large reserves and an established production history become more valuable. 

Venezuela has occupied that position before. Venezuelan oil played an important strategic role for the Allies during the Second World War, for example. Today, renewed disruption around Iran and the Strait of Hormuz has again tightened the market and raised the geopolitical value of accessible barrels.

That is precisely why the current outcome appears so paradoxical. If global conditions improve Venezuela’s leverage, one would expect the country to negotiate from a stronger position and to demand a larger participation. One would expect a legal framework that captures more rent, not less; that uses geopolitical scarcity to reinforce state take, not to dilute it. But the current reform, alongside the sequence of deals with foreign conglomerates, and combined with US control over revenues, seem to move in the opposite direction.

This leads to the second point: the geopolitical issue is not only price or supply. It is also about control. What is emerging is a form of sovereignty under tutelage. Venezuela may formally remain the owner of the resource, but effective control over commercialization, revenue channels, and external validation appears increasingly conditioned from outside. Whether one calls that tutelage, external supervision, or subordinated reintegration, the takeaway is the same: sovereignty over the resource is no longer identical to sovereignty over the business. Recent US licenses illustrate the point very clearly. Washington has opened the door to renewed oil transactions with PDVSA, but under Treasury oversight and with proceeds channelled into US-administered accounts. That is not normal sovereign control over national oil income.

This is where the distinction between the origin and the destination of rent becomes especially useful. Even before we ask what is done with oil income socially or politically, we first need to know how that income is generated: through what pricing, what discounts, what fiscal structure, and through which payment channels. If that first level is opaque, then both the origin and the destination of rent become politically indeterminate. In other words, the problem is not only that the country may receive less revenue. The problem is that the country may not even be able to clearly verify what it is owed, how, and why. That is a much deeper sovereignty problem.

As a result, a geopolitical context that would, in theory, favor Venezuela, sees the country re-entering global markets with weakened sovereignty, under a framework of greater flexibility for operators and less certainty for the nation. That is why the debate is no longer only about production volumes or export flows. The real debate is about the jurisdictional and political order that now governs Venezuelan oil: who authorizes, who commercializes, who arbitrates disputes, who tracks the proceeds, and who answers to the country.

What does a sovereign recovery look like?

Moving from critique to programme is difficult, and the first honest thing to say is that no one can predict the exact path ahead. Venezuela is emerging from collapse, sanctions, loss of market share, institutional erosion, and a deep social crisis. Any recovery scenario, therefore, is bound to be politically fraught. But one thing is clear: if the country does not rebuild the public intelligibility of oil income, then any so-called recovery may simply reproduce opacity, distrust, inequality, and social tension.

A sovereign recovery does not mean autarky. It does not mean excluding foreign firms, nor does it mean mechanically returning to an earlier model. It means something more precise: restoring the link between ownership, public rule, and accountable income capture. In other words, if the nation owns the resource, then the nation must be able to know, verify, and govern how value is extracted from it. That means transparency over net prices, discounts, taxes, royalties, exemptions, payment channels, and the destination of funds. Without that, there can be no recovery in any meaningful sovereign sense. It would simply be resumed extraction.

A sovereign recovery also requires stripping away some of the ideological confusion that usually surrounds debates on natural resources. As Bernard Mommer argued more than twenty years ago, the governance of natural resources is, in many ways, a more elementary question than the conventional left-right divide suggests. In the case of oil and minerals, the deeper divide is above versus below. It is the tension between those who live and work on the surface (the nation, society, the public realm) and those who make their living from the subsoil.

That is why the question of ownership comes before the question of distribution, that is, before the question of what is done with the income generated by oil activity. Only after establishing the governance over the resource and the rules over its extraction does the familiar left-right question properly arise: how that income is used, whether for social spending, public services, etc., or private accumulation. 

The first step, then, is transparency. Not as a slogan, but as an institutional obligation. Who is selling? At what net price? Under what discounts? With what deductions? Paid where? Audited by whom? These are not minor administrative questions. They are the very mechanics of sovereignty in an extractive economy. If the country cannot answer them, then the state is no longer exercising full command over its principal source of income.

The second step is to move away from excessive discretion and back towards intelligible general rules. Contracts will always matter in oil. But there is a difference between contracts operating within a strong public framework and contracts effectively replacing public rule. Once everything becomes negotiable in the name of investment or “economic equilibrium,” the public realm shrinks and the executive realm expands. That is politically dangerous in any country, but especially in one where oil historically underpinned a broader social pact.

The third step is to reconnect oil income with social legitimacy. This is not an abstract issue. It is whether oil wealth translates to salaries, living standards, public services, social protection, and some minimum sense of collective benefit. If the country enters a new extractive cycle in which more oil is produced but public income remains narrow, opaque, or externally conditioned, then social tensions are likely to intensify rather than diminish. That is why a sovereign recovery cannot be measured by production figures alone. It must be judged by whether the nation regains an intelligible and legitimate claim over the income stream.

In simple terms, the average Venezuelan citizen is aware of fluctuations in crude prices because they know they affect the national budget. Oil income is widely and legitimately perceived as income belonging to the nation, and therefore as something that ought to support public services and collective welfare. Even when that income is later misused (through corruption, clientelism, or mismanagement) the underlying perception remains: oil revenue belongs to all Venezuelans.

That is also why the current situation can be described as one of sovereignty under tutelage. The country may still be sovereign in formal terms, yet it operates under external supervision in practical terms. Unless that gap is closed, the language of recovery will remain politically fragile.

Blas Regnault is an oil market analyst and researcher based in The Hague, whose work explores how oil prices move across time and what they tell us about the global economy. Drawing on years of experience in central banking, energy research, and international consulting, he brings together political economy, business cycles, production costs, and petroleum governance in a way that is both rigorous and accessible.

He has spent much of his career studying the deeper forces behind oil price trends and fluctuations, always with an eye on the institutional and geopolitical realities of the global petroleum market. Later this year, he will publish his book, Political Economy of Oil Prices: Trends and Business Cycles in the Global Petroleum Market, with Routledge.

The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.

WASHINGTON — Los Angeles Mayor Karen Bass and L.A. County Supervisor Kathryn Barger met privately with President Trump and administration officials Wednesday to press for federal support and yet-unpaid wildfire recovery funding as the region continues to rebuild from the 2025 fires.

“This afternoon we met with President Trump and Administration officials to advocate for families who lost everything,” Bass and Barger said in a statement. “We had a very positive discussion about FEMA and other rebuilding funds as well as the support of the President to continue joining us in pressuring the insurance companies to pay what they owe — and for the big banks to step up to ease the financial pressure on L.A. families.”

Barger said the two leaders had a “high-level discussion” with the president in the Oval Office, sharing stories about what fire survivors are experiencing day to day. She added that “we left details behind with the President,” but did not specify whether Trump made any funding or policy promises during the meeting.

“First and foremost, today’s meeting was to thank the President for his initial support of infusing federal resources to expedite debris removal, as well as his recent tweet about insurance companies, which have already proven fruitful,” she said in a statement provided to The Times.

Bass was similarly reserved about the discussions, telling reporters that “we will follow up with the details,” but signaled progress is being made on federal support.

“I think what’s important is that we certainly got the president’s support in terms of, you know, what is needed, and then the appropriate people were in the room for us to follow up. And that was Russ Vought, who is the head of the Office of Management and budget,” Bass told KNX on Wednesday.

The meeting comes on the heels of a yearlong standoff between California leaders and the Trump administration over wildfire recovery funding, disaster response and whether the federal government should have a say in local rebuilding permitting.

California leaders, led by Gov. Gavin Newsom, have accused the Trump administration of withholding billions in critical wildfire aid, prompting a lawsuit over stalled recovery funds. Officials allege political bias in the delay of billions of dollars from the Federal Emergency Management Agency.

Newsom visited Washington in December. When he made his rounds on Capitol Hill, he met with five lawmakers, including three who serve on the Senate and House appropriations committees, to renew calls for $33.9 billion in federal aid for Los Angeles County fire recovery.

But the governor said he was denied a meeting with FEMA and would not say whether he had attempted to meet with Trump to discuss the issue.

Bass, meanwhile, appears to have found a path to the president on a subject that has been paramount for her community.

The fruitful meeting comes after Trump lobbed insults at the mayor at a news conference earlier this year, where he called her “incompetent” for how she handled last year’s wildfire recovery efforts. He alleged that under Bass’ leadership, the city’s delay in issuing local building permits will take years when it should have taken “two or three days.”

California officials, including Newsom, have urged the Trump administration to send Congress a formal request for the $33.9 billion in recovery aid needed to rebuild homes, schools, utilities and other critical infrastructure destroyed or damaged when the fires tore through neighborhoods more than 15 months ago.

What Bass and Barger’s meeting with the president ultimately produces remains to be seen.

The billions in recovery aid have not yet materialized, but the meeting could potentially give those discussions new momentum.

The White House did not immediately respond to a request seeking comment about the meeting.

Earlier this month, Trump criticized insurance provider State Farm on Truth Social for its handling of the devastating Los Angeles County wildfires. He accused the insurance giant of abandoning its policyholders when tragedy struck.

“It was brought to my attention that the Insurance Companies, in particular, State Farm, have been absolutely horrible to people that have been paying them large Premiums for years, only to find that when tragedy struck, these horrendous Companies were not there to help!” Trump wrote.

But the rebuke didn’t come out of the blue. It stemmed from a controversial February visit to Los Angeles by Trump administration officials.

Trump tapped Environmental Protection Agency Administrator Lee Zeldin in an effort to strip California state and local governments of their authority to permit the rebuilding of homes destroyed in the Eaton and Palisades fires.

Within the week, Zeldin was in Los Angeles, bashing Newsom and Los Angeles officials at a roundtable with fire victims and reporters, saying that residents were suffering from “bureaucratic, red tape delays and incompetency” and that leadership was “denying them … the ability to rebuild their lives”.

During the trip, officials heard direct complaints from local leaders and fire victims about insurers being slow, restrictive and insufficient with their claim payouts.

After these meetings, Trump directed Zeldin to investigate the insurers’ responses. State Farm, facing roughly $7 billion in fire-related claims, is also under formal investigation by California’s insurance commissioner over its handling of the crisis.

Despite tensions with the administration, Bass and Barger appeared confident that progress was being made on the insurance and funding issues.

“Our job is to fight for our communities,” their joint statement concluded. “When it comes to this recovery, our federal partners are essential, and we are grateful for the support of the President.”