AUSTIN, Texas – With former Venezuelan President Nicolás Maduro out of power, President Trump said he wants to reboot the oil industry in Venezuela. 

That idea has raised questions about whether it could cause a price spike at the gas pump and a downturn in the Texas oil patch region. 

Now, a spike at the pump and a production slump in the Texas oil patch may not happen this year, but with oil prices down, a budget crunch for state lawmakers may be waiting when they return to Austin in 2027.

What they’re saying:

The situation in Venezuela is creating a lot of political uncertainty, but a Texas energy expert said he is not expecting that uncertainty to cause an oil patch crash or a gas pump pike in 2026.

Prices at the pump are low and despite some recent big swings, up and down, analysts say 2026 could see the lowest prices since the pandemic. That prediction has people like Dale Owens cautiously optimistic.

“Things change so drastically nowadays. I mean, look what’s happening with the government, so anything can affect the price. But right now I’m really happy that it’s stable,” said Owens.

There are big reasons for that local gas price stabilization, and it predates the leadership change in Venezuela, according to Ed Hirs, an Energy Fellow at the University of Houston.

“The first is that the president has asked MBS (Saudi Crown Prince Mohammed bin Salman) and OPEC nations to continue pumping a pace. Number one. Number two, this helps hamstring the Russian economy and its war effort. And that’s also one of the goals of not only the European Union, but of the Trump administration. And number three, we’ve got the midterm elections coming up,” said Hirs.

The price of a barrel of oil is expected to increase slightly because of the uncertainty regarding Venezuela. Texas crude oil production, according to an update released Monday, was stable in December, but state data also showed drilling permits for 2025 were at 369 and that’s down from 459 in 2024.

“When President Trump took office, oil was about $80 a barrel, today it’s under $60 a barrel. We are the high-cost producers in the global commodity oil market, and the cost of drilling these wells has gone up by between 5% and 12%, primarily because of Trump’s steel tariffs. Not only does the imported steel now cost a lot more, but domestic producers raise their So the producers in West Texas and across the Permian Basin are getting squeezed by much lower revenues, $20 a barrel less and much higher cost. It’s not a good capital investment for Wall Street,” said Hirs.

Dig deeper:

The oil industry remains a big part of the Texas economy and the state budget. State lawmakers will return to Austin in 2027 to crunch numbers for a new two-year budget.

“I think they need to be looking at the budget. So the state comptroller needs to be running the numbers now based on lower oil revenues, not only for state lands, for example, for the universities, but for the state tax receipts. And that applies to the counties and cities that rely on these revenues to keep their budgets balanced. It’s going to be lower for longer,” said Hirs. 

There are also doubts about whether the Texas refineries will get a financial windfall if the Trump Administration is able to reboot the oil industry in Venezuela. There are about six refineries in Texas and Louisiana that can process the heavy crude that is located in Venezuela.

“Well, it might help keep them open. But Lyondell just closed down a 100-plus-year-old heavy crude refinery on the Houston Ship Channel because it just doesn’t make any sense to reinvest in it. And it was going to require $750, $800 million of new capital investment just to keep the plant operating at par,” said Hirs.

What’s next:

Stocks for several oil companies did increase on Monday. Chevron, at one point, had a 10% stock price surge, mainly because Chevron is the only U.S. company operating in Venezuela. Other energy-related companies also saw an increase, like Exxon, as well as industry suppliers like Baker-Hughes and Halliburton. 

The action on Wall Street came after President Trump said he wants energy producers to pay for the oil production rebuild. Hirs described the administration’s plans as being “naive.”

Past attempts to rebuild another country’s oil infrastructure seem to back up the doubts raised by Hirs. In 1989, after the Soviet Union collapsed, companies like Exxon went in to rebuild — only to get kicked out later by the Russians. Hirs also noted the rebuilding effort in Iraq, started by President George W. Bush, hasn’t returned production there to pre-war levels. And it’s the same story for Libya, which was done under President Obama.