A new chance for cash transfers from oil revenues?

Shortly after the startling news of the US removal of President Maduro from Venezuela in early January 2026, there was the announcement by the US government that they will control the Venezuelan oil revenues for the next few years, the proceeds being used ‘to benefit the people of Venezuela and the US’. This has raised many questions. I want to focus on only one underrated question: how can it be achieved so that part of the oil revenues really benefit the citizens of Venezuela, given that Venezuela is one of the most corrupt regimes in the world? Direct cash transfers to citizens could, in my view, be worth exploring as an avenue, following the example of Alaska and Guyana.

Venezuela: A case study of Dutch Disease and Resource Curse

The history of oil in Venezuela goes back more than a century. After Shell struck oil in the Maracaibo basin in 1914, a massive influx of foreign oil companies led to more major discoveries, making Venezuela the largest global oil producer after the US by 1929 (Van Hulst, 2023).¹ Ever since then, the oil sector has dominated the economy, generating 90% of export income and becoming the main source of government revenues. The national currency, the bolivar, appreciated and became one of the world’s strongest currencies, holding back non-oil exports and thus limiting industrialisation and agriculture. Subsequent Venezuelan governments managed to lift the share of government revenues in several stages, propelling Venezuela into a relatively wealthy and modern country even despite considerable waste and corruption, in particular after World War II with the soaring demand for oil. In 1976, the government nationalised the oil industry, creating the state-owned PdVSA, which, however, was run as a commercial company, allowing it to partner with foreign oil companies. The economy went through boom-and-bust cycles, not uncommon in oil-rich countries, and corruption increased over time. Fast forward to the election of Hugo Chavez in 1998, when the country took a disastrous turn. Chavez pledged a ‘Bolivarian revolution’ to use the country‘s oil wealth to reduce poverty and inequality. Riding the wave of rising oil prices, this was to some extent successful, until Chavez dismantled the democratic system, took control of PdVSA, and started using it as his ‘piggy bank’. This triggered a huge strike of oil workers and subsequently the firing of thousands of technical experts. This shocking event precipitated a long and steady decline in Venezuela’s oil production from which it has not recovered so far. Most of the foreign companies left. 

After Chavez’ death in 2013, his successor, Nicolas Maduro, was soon confronted with tumbling oil prices for which Venezuela was entirely unprepared. From then on, things only got even worse due to mismanagement and corruption. Venezuela fell victim to hyperinflation and a deep economic recession. GDP collapsed, and poverty spiked, with crime becoming endemic and drug cartels omnipresent. There are also reports about widespread blackouts and hunger. People started voting with their feet, with an unprecedented number of 8 million Venezuelans out of a population of 30 million fleeing the country. 

Coming back to oil: Venezuela’s production has declined to well under 1 million barrels a day, with tightening US sanctions and, most recently, with the oil blockade. This is, of course, a far cry from the 3+ million it produced in the 1990s and early 2000s, while the remaining oil reserves are the largest in the world, even if partly very heavy crude oil that is costly to recover. It is at this stage an open question what it would require in terms of oil infrastructure investment and regulatory changes to convince foreign oil companies to help Venezuela boost oil production.² Even apart from this critical question, there seems to be a significant upward potential in Venezuela’s oil production of possibly 300-500.000 barrels per day by mid-2027.³ 

The question I want to address here is how to ensure that the proceeds of any Venezuelan oil that the US may sell will actually benefit the citizens of Venezuela. That is far from obvious given what we know about the current regime. According to Transparency International, Venezuela has one of the worst levels of public corruption in the world, placing 178 out of 180 countries listed on their latest Corruption Perceptions Index from 2024.⁴ If the proceeds of the oil sale flow directly back to the current regime, then we probably know where these end up. One alternative worth considering is the Alaska model, which establishes a direct link between government oil revenues and cash grants to citizens, as advocated in my 2023 book.

The Alaska model: A promising avenue

The US State of Alaska is one of the few constituencies where citizens have received a yearly payment from the Alaska Permanent Fund based on government oil revenues since 1982.⁵ Mongolia also for some time distributed part of its government mining revenues to its citizens. The Canadian province of Alberta has once used the channel of a direct cash transfer of oil windfalls to citizens in 2006, but elsewhere the Alaska example has not yet seen many followers. However, an encouraging recent example is the one-time cash grant that Guyana citizens received in 2024/2025 from the government, funded by oil revenues.⁶ Although there have been calls for more frequent distributions, so far this has not happened. Another promising signal is the ‘Royalties for All’ program proposal in neighbouring Suriname that implies a one-off cash transfer of $750 for every citizen to be funded from future royalty revenues that are expected to come in from 2028.⁷ The oil-to-cash approach can be a very powerful measure to empower citizens, reduce poverty, and keep money away from rent-grabbing. It also helps economic diversification through the channel of enhanced consumer spending, as well as the transparency and accountability of government decisions on resource management. Last but not least, it sends the message that the oil resources belong to the people.⁸ Some in the US administration, like Peter McPherson, apparently promoted this model in the early days of the Iraqi reconstruction, but somehow did not succeed.⁹ Will it be different this time?

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

Track the real‑world impact behind the sustainability headlines. illuminem’s Data Hub™ offers transparent performance data and climate targets of companies driving the transition.

References

1. Noé van Hulst, From Dutch Disease to Energy Transition, CIEP, 2023), ciep.energy

2. Daniel Yergin, ‘Can Trump Make Venezuela an Oil Giant Again?’, Wall Street Journal, Jan 9, 2026.

3. Javier Blas, ‘Forget the Naysayers, Venezuela Offers Quick Oil Wins’, Bloomberg, January 9, 2026.

4. Transparency International, Venezuela: Transparency International Forced Into Exile Amid Growing Repression of Civil Society, Press release, 13 March 2025.

5. In 2025, the oil dividend for each Alaska resident was $1,000 see https://pfd.alaska.gov

6. ‘$100k cash grant distribution to continue after 2025 Budget is passed, says Nandlall’, January 2025, newsroom.gy. This cash grant amounts to roughly US $480 for each eligible adult citizen over 18 years, targeting 600.000 recipients..

7. Energynews.pro, 5 May (2025). See also T. Moss, ‘Royalties for Everyone!’, Substack, May 27 (2025).

8. This powerful moral and legal argument has been made by Leif Wenar, Blood Oil, 2016.

9. See e.g. John Snow, Memorandum for Ambassador L. Paul Bremer, Subject: Announcement of an Oil Trust Fund for the Iraqi People, Department of The Treasury, U18825’/03, https://library.rumsfeld.com