What Venezuela’s oil situation could mean for Windsor-Essex drivers

A University of Windsor is weighing in on whether or not Canadian gas prices will be affected by what happened in Venezuela.

As Venezuela’s oil industry returns to the global spotlight, some Windsor-Essex drivers may be wondering whether the fallout could eventually be felt at the gas pump.

The conversation comes amid shifting political control in Venezuela and questions about how — and by whom — the country’s oil could be brought to market.

A University of Windsor political science professor says any impact on local fuel prices is unlikely to show up quickly.

Jesse Salah Ovadia is an associate professor in political science with expertise in oil and energy politics.

Ovadia says oil’s role in the global economy helps explain why it’s often tied up in international conflicts.

“The global economy runs on oil,” he said. “Whatever commodity in the economy you’re talking about, it needs to be transported, and transportation runs with oil.”

But when it comes to day-to-day price changes for consumers, he cautions against expecting an immediate effect.

“It in the very short term it’s possible that there’ll be some speculation on what the long-term impact might be,” he said. “Other than that, I don’t think it can really affect the price at the pumps very much.”

He says the kinds of shifts that could change prices are tied to longer-term decisions and major investments.

“You’re talking really about new investment in Venezuela’s oil industry, and that would play out over decades,” he said.

Even then, he says companies would need confidence that the political situation is stable before making big bets.

“If I make a 20-to-30-billion-dollar investment in Venezuela, will I be okay for the next 30 years?” he asked. “Is it a stable and safe place to do business? And will I get my money back?”

If anything does shift, Ovadia says the bigger impact could be on diesel — not regular gasoline.

“Because the kind of oil that Venezuela produces is more easily refined into diesel,” he said.

Ovadia also notes “there’s already an oversupply of oil, globally,” adding “those are the kinds of conversations you can’t really have right after something like this happens.”