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The research instead suggests the opposite is true.

When former President Donald Trump was campaigning in Michigan last week, he warned autoworkers that President Biden’s electric vehicle policies would “put an end” to their “way of life.”
“Hundreds of thousands of American jobs, your jobs, will be gone forever,” he said. “By most estimates, under Biden’s electric vehicle mandate, 40% of all U.S. auto jobs will disappear.”
Trump may be exaggerating, but the underlying idea, that electric vehicles require less labor to manufacture than internal combustion engine cars, is the conventional wisdom. It has been circulated for years by automakers, autoworkers, politicians, and journalists. EVs contain fewer parts, the thinking goes, so naturally they will require fewer workers.
That logic seems obvious, which might be why it hasn’t received much scrutiny. But when I tried to find any research supporting it, what I found instead suggested the opposite. A number of analyses showed that electric vehicles could actually require more labor to build than gas-powered cars in the U.S., at least for the foreseeable future.
There are countless news articles and studies that reiterate the point that electric vehicles “have fewer moving parts” or are “less complex” and therefore pose a threat to autoworkers’ jobs. Many cite a 2017 Ford presentation that mentioned a “30% reduction in hours per unit” as a benefit of producing EVs, or former Volkswagen CEO Herbert Diess, who said in 2019 the company would need to make job cuts due to its switch to EVs, which “involve some 30% less effort.” More recently, as the United Auto Workers strike has ramped up, a 2022 quote from Ford’s CEO Jim Farley that “it takes 40% less labor to make an electric car,” has been circulating.
But I couldn’t find any data, research, or even further explanation backing up these figures. Part of the challenge of digging into these claims is that it’s not clear what they even refer to. Are the CEOs talking about the labor required for final assembly, like dropping in the motor and putting on the doors? Are they taking into account the production of components, like the EV battery? Where do they draw the line on what constitutes EV manufacturing?
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Ford didn’t respond directly to my request for more information about its public estimates. Instead, spokesperson Dan Barbossa replied that if I was going to quote Farley, I needed to include his entire quote. After dropping the “40% less labor” statistic, Farley had continued, “So as a family company, we have to insource so that everyone has a role in this world. We have a whole new supply chain to fill out, in batteries and motors and electronics.”
There may be more to Farley’s words than a bit of public relations fluff. His suggestion that building out new supply chains will help people find “a role” aligns with the conclusions of a study that Volkswagen’s independent Sustainability Council commissioned in 2020. It was conducted by the Fraunhofer Institute for Industrial Engineering, a German research group, using Volkswagen company data, and found only minor impacts on employment due to the transition. Losses can be mitigated by “shifting to the production of new components,” it said, like the individual battery cells that make up the battery packs.
One of the findings was that “employment intensity” for the final manufacturing of Volkswagen’s electric ID.3 is only 3% lower than that of the conventional Golf Mk8. The bigger gap is in the labor required to produce the individual components of each car’s drivetrain. The employment intensity of the battery system and electric motor, combined, was about 40% lower than that of the combustion engine and transmission system.
Notably, the study did not include the jobs required to produce the individual battery cells which make up the battery system, because Volkswagen wasn’t producing them at the time. But a more recent analysis of the U.S. manufacturing landscape found that cell production holds the most potential for job creation, and concluded that if you account for this, the transition to EVs could actually result in significantly more jobs.
Turner Cotterman, a McKinsey consultant, led the research as part of his Ph.D. in public policy and engineering at Carnegie Mellon under Associate Professor Kate Whitefoot. He sought out partnerships with U.S.-based automakers and electric vehicle component manufacturers and collected original data from nine companies on the number of hours it takes to complete more than 250 process steps. In some cases he visited the shop floors and personally gathered the data himself. In his final analysis, he also incorporated public data for an additional 78 production process steps. He used the data to model three scenarios where EV and combustion engine powertrains are produced at the average efficiency, as well as a “most efficient” case and a “least efficient” case.
In every case, EV manufacturing required more hours. The conventional powertrains took 4 to 11 worker hours, while the EV powertrains took 15 to 24. “A lot of the confusion sits around, what parts are you counting in this evaluation?” Cotterman told me. “We’re saying that if you were to produce every single component in an EV in the U.S., that the total sum of those powertrain components will be higher than the equivalent ICE components.”

There are a few important caveats to the research. For one, Cotterman stressed that these are present-day numbers, and they might change as EV plants scale up and learn to be more efficient. When he looked at data from Chinese manufacturing plants, they were a lot more efficient than what he saw in the U.S. And that relates to his other point. Currently, most battery components are not made in the U.S.
“With so many battery components made in China and South Korea, a lot of those potential labor hours are being captured by other countries,” he said. “So it's a question of the future American manufacturing workforce — how do we value them? How many opportunities do we want to extend to them?”
Another report published in 2021 by the Economic Policy Institute, a nonpartisan think tank, reached a similar conclusion. It found that the stakes for workers in the EV transition depend largely on public policy efforts to shore up U.S. manufacturing and enhance job quality. “The real challenge is making sure U.S.-based producers can invest enough to become competitive in battery production, and claw back some of the overall sales market share they lost since the Great Recession,” Josh Bivens, chief economist at the institute, told me in an email. “These are much bigger deals than anything about the inherent production process of EVs — and they’re very amenable to policy.”
Automakers have claimed that paying workers more would put them at a disadvantage and hinder their ability to invest in the EV transition. But in a recent blog post, the Economic Policy Institute argued that with the help of subsidies from President Biden’s signature climate law, the Inflation Reduction Act, automakers have “more than enough money” to invest in EVs, pay workers a fair share, and maintain healthy profits.
The IRA created a domestic manufacturing tax credit that subsidizes the production of battery cells to the tune of $35 per kilowatt-hour of capacity. It offers an additional $10 per kilowatt-hour tax credit for the domestic production of battery modules, or the process of assembling the cells into arrays that later get put into battery packs. And there’s another incentive for automakers to onshore battery production — it will help their vehicles qualify for the IRA’s consumer tax credit.
According to a database maintained by the advocacy group Climate Power, there have been about 10 EV battery manufacturing plant projects announced in the U.S. since the IRA was passed, at least some of which will produce cells.
So is the crux of the matter that EV job losses or gains all come down to batteries? Not necessarily.
Whether or not the U.S. is able to build up domestic battery production, early evidence of the EV transition in the United States shows that EVs may require more labor, even in the final assembly stages.
Anna Stefanopoulou, a professor of mechanical engineering at the University of Michigan, has been investigating three manufacturing sites that used to produce conventional cars and are now producing EVs: A Tesla factory in California that used to be a jointly-owned facility between GM and Toyota that produced Pontiacs and Corollas; a Rivian plant in Illinois that previously produced Mitsubishis; and the Orion Assembly plant in Michigan, where GM transitioned from producing Chevy Sonics and Buick Veranos to electric Chevy Bolts.
Her research has not been peer reviewed or published yet, but Stefanopoulou told me that after analyzing publicly available data sources for employment and output at each plant, she found that productivity had gone down in all three cases. Each one is producing fewer vehicles per worker than they were before, meaning it’s taking more people per vehicle to produce electric cars. The California site, which has been producing EVs for the longest out of the three, showed the most dramatic change. At its peak, the GM/Toyota plant produced 80 vehicles per person per year. The Tesla plant averages 30.
Stefanopoulou believes the data reflects the nascent state of U.S. electric vehicle manufacturing. She predicts that after a decade or so, as processes become more streamlined, the commonly-held belief that EV assembly requires less labor will turn out to be correct. However, she also said that if she were to consider battery cell production, as Cotterman did, EV production on the whole could require more people.
She also stressed that her data is not conclusive, and poses many more questions. For example, she found that overall production per worker in the U.S. is falling. So does the labor intensity at the EV plants reflect something specific about those factories, or a bigger issue in U.S. manufacturing productivity?
It’s also been hard for her team to identify what was actually being produced at each plant at any given time. For example, the previous owners of the California plant did not assemble engines there, but the Tesla factory is assembling battery packs. So that might explain why productivity is so much lower now. But there are a lot of unknowns. “Over the years, they changed their patterns,” she told me. “They take the cells and assemble the pack, or occasionally they manufacture cells. So we don’t know exactly what kind of work the plants include. We know the outputs are vehicles, but what does assembly include?”
In any case, Stefanopoulou is torn about what conclusion to draw from her findings on productivity. “Sometimes I don’t know if what I will present in my paper will be good news or bad news,” she told me. “Maybe it’s good news for our people that are involved, but at the end, you know, we need to be productive also, so that we can actually lower the costs so people can afford buying electric vehicles.”
What seems clear is that whether the transition results in more jobs or fewer depends a lot on which processes you’re including, how many of them will ultimately be done domestically, and how much will get streamlined through automation and other efficiency measures.
At the same time, topline job numbers aren’t the full story. The jobs created in the EV transition will certainly not all resemble the jobs that are lost. They may not be located in the same places, or require the same set of skills. Workers are right to be worried about upheaval.
But these are things that can be managed, if automakers are willing to come to the table with workers, and vice versa. For example, when Ford negotiated the closure of its Romeo Engine Plant at the end of last year, every employee was offered either a buyout or a transfer to another facility. Barbossa, the Ford spokesperson, told me many are now working about 20 minutes away, at the Van Dyke Electric Powertrain Center, building EV power units for the F-150 Lightning and hybrid powertrains for the Maverick and F-150.
I reached out to the United Autoworkers to get their thoughts on these studies, but the union did not respond to my questions. The UAW does appear to have a good handle on the stakes of battery manufacturing, however. Last week, Jim Farley of Ford provided an update on the negotiations, and said that “the UAW is holding the deal hostage over the battery plants.”
Farley vowed that none of its workers will lose their jobs due to battery plants during the next contract period. “In fact, for the foreseeable future we will have to hire more workers as some workers retire, in order to keep up with demand,” he said. “We are open to working with the union on a fair deal for battery plants, but these are multi-billion investments and they have to make business sense.”
Read more about electric vehicles and labor:
What the UAW Wants Exactly — and What It Means for Electric Cars
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Deep Fission says that building small reactors underground is both safer and cheaper. Others have their doubts.
In 1981, two years after the accident at Three Mile Island sent fears over the potential risks of atomic energy skyrocketing, Westinghouse looked into what it would take to build a reactor 2,100 feet underground, insulating its radioactive material in an envelope of dirt. The United States’ leading reactor developer wasn’t responsible for the plant that partially melted down in Pennsylvania, but the company was grappling with new regulations that came as a result of the incident. The concept went nowhere.
More than a decade later, the esteemed nuclear physicist Edward Teller resurfaced the idea in a 1995 paper that once again attracted little actual interest from the industry — that is, until 2006, when Lowell Wood, a physicist at the Lawrence Livermore National Laboratory, proposed building an underground reactor to Bill Gates, who considered but ultimately abandoned the design at his nuclear startup, TerraPower.
Now, at last, one company is working to make buried reactors a reality.
Deep Fission proposes digging boreholes 30 inches in diameter and about a mile deep to house each of its 15-megawatt reactors. And it’s making progress. In August, the Department of Energy selected Deep Fission as one of the 10 companies enrolled in the agency’s new reactor pilot program, meant to help next-generation startups split their first atoms by July. In September, the company announced a $30 million reverse merger deal with a blank check firm to make its stock market debut on the lesser-known exchange OTCQB. Last month, Deep Fission chose an industrial park in a rural stretch of southeastern Kansas as the site of its first power plant.
Based in Berkeley, California, the one-time hub of the West Coast’s fading anti-nuclear movement, the company says its design is meant to save money on above-ground infrastructure by letting geology do the work to add “layers of natural containment” to “enhance safety.” By eliminating much of that expensive concrete and steel dome that encases the reactor on the surface, the startup estimates “that our approach removes up to 80% of the construction cost, one of the biggest barriers for nuclear, and enables operation within six months of breaking ground.”
“The primary benefit of placing a reactor a mile deep is cost and speed,” Chloe Frader, Deep Fission’s vice president of strategic affairs, told me. “By using the natural pressure and containment of the Earth, we eliminate the need for the massive, above-ground structures that make traditional nuclear expensive and slow to build.”
“Nuclear power is already the safest energy source in the world. Period,” she said. “Our underground design doesn’t exist because nuclear is unsafe, it exists because we can make something that is already extremely safe even safer, simpler, and more affordable.”
But gaining government recognition, going public, and picking a location for a first power plant may prove the easy part. Convincing others in the industry that its concept is a radical plan to cut construction costs rather than allay the public’s often-outsize fear of a meltdown has turned out to be difficult, to say nothing of what actually building its reactors will entail.
Despite the company’s recent progress, I struggled to find anyone who didn’t have a financial stake in Deep Fission willing to make the case for its buried reactors.
Deep Fission is “solving a problem that doesn't actually exist,” Seth Grae, the chief executive of the nuclear fuel company Lightbridge, told me. In the nearly seven decades since fission started producing commercial electrons on the U.S. grid, no confirmed death has ever come from radiation at a nuclear power station.
“You’re trying to solve a political problem that has literally never hurt anyone in the entire history of our country since this industry started,” he said. “You’re also making your reactors more expensive. In nuclear, as in a lot of other projects, when you build tall or dig deep or lift big and heavy, those steps make the projects much more expensive.”
Frader told me that subterranean rock structures would serve “as natural containment, which also enhances safety.” That’s true to some extent. Making use of existing formations “could simplify surface infrastructure and streamline construction,” Leslie Dewan, a nuclear engineer who previously led a next-generation small modular reactor startup, told IEEE Spectrum.
If everything pans out, that could justify Deep Fission’s estimate that its levelized cost of electricity — not the most dependable metric, but one frequently used by solar and wind advocates — would be between $50 and $70 per megawatt-hour, lower than other SMR developers’ projections. But that’s only if a lot of things go right.
“A design that relies on the surrounding geology for safety and containment needs to demonstrate a deep understanding of subsurface behavior, including the stability of the rock formations, groundwater movement, heat transfer, and long-term site stability,” Dewan said. “There are also operational considerations around monitoring, access, and decommissioning. But none of these are necessarily showstoppers: They’re all areas that can be addressed through rigorous engineering and thoughtful planning.”
As anyone in the geothermal industry can tell you, digging a borehole costs a lot of money. Drilling equipment comes at a high price. Underground geology complicates a route going down one mile straight. And not every hole that’s started ends up panning out, meaning the process must be repeated over and over again.
For Deep Fission, drilling lots of holes is part of the process. Given the size of its reactor, to reach a gigawatt — the output of one of Westinghouse’s flagship AP1000s, the only new type of commercial reactor successfully built from scratch in the U.S. this century — Deep Fission would need to build 67 of its own microreactors. That’s a lot of digging, considering that the diameters of the company’s boreholes are on average nearly three times wider than those drilled for harvesting natural gas or geothermal.
The company isn’t just distinguished by its unique approach. Deep Fission has a sister company, Deep Isolation, that proposes burying spent nuclear fuel in boreholes. In April, the two startups officially partnered in a deal that “enables Deep Fission to offer an end-to-end solution that includes both energy generation and long-term waste management.”
In theory, that combination could offer the company a greater social license among environmental skeptics who take issue with the waste generated from a nuclear plant.
In 1982, Congress passed a landmark law making the federal government responsible for the disposal of all spent fuel and high-level radioactive waste in the country. The plan centered on building a giant repository to permanently entomb the material where it could remain undisturbed for thousands of years. The law designated Yucca Mountain, a rural site in southwestern Nevada near the California border, as the exclusive location for the debut repository.
Construction took years to start. After initial work got underway during the Bush administration, Obama took office and promptly slashed all funding for the effort, which was opposed by then-Senate Majority Leader Harry Reid of Nevada; the nonpartisan Government Accountability Office clocked the move as a purely political decision. Regardless of the motivation, the cancellation threw the U.S. waste disposal strategy into limbo because the law requires the federal government to complete Yucca Mountain before moving on to other potential storage sites. Until that law changes, the U.S. effort to find a permanent solution to nuclear waste remains in limbo, with virtually all the spent fuel accumulated over the years kept in intermediate storage vessels on site at power plants.
Finland finished work on the world’s first such repository in 2024. Sweden and Canada are considering similar facilities. But in the U.S., the industry is moving beyond seeing its spent fuel as waste, as more companies look to start up a recycling industry akin to those in Russia, Japan, and France to reprocess old uranium into new pellets for new reactors. President Donald Trump has backed the effort. The energy still stored in nuclear waste just in this country is sufficient to power the U.S. for more than a century.
Even if Americans want an answer to the nuclear waste problem, there isn’t much evidence to suggest they want to see the material stored near their homes. New Mexico, for example, passed a law barring construction of an intermediate storage site in 2023. Texas attempted to do the same, but the Supreme Court found the state’s legislation to be in violation of the federal jurisdiction over waste.
While Deep Fission’s reactors would be “so far removed from the biosphere” that the company seems to think the NRC will just “hand out licenses and the public won’t worry,” said Nick Touran, a veteran engineer whose consultancy, What Is Nuclear, catalogs reactor designs and documents from the industry’s history, “the assumption that it’ll be easy and cheap to site and license this kind of facility is going to be found to be mistaken,” he told me.
The problem with nuclear power isn’t the technology, Brett Rampal, a nuclear expert at the consultancy Veriten, told me. “Nuclear has not been suffering from a technological issue. The technology works great. People do amazing things with it, from curing cancer to all kinds of almost magical energy production,” he told me. “What we need is business models and deployment models.”
Digging a 30-inch borehole a mile deep would be expensive enough, but Rampal also pointed out that lining those shafts with nuclear-grade steel and equipping them with cables would likely pencil out to a higher price than building an AP1000 — but with one one-hundredth of the power output.
Deep Fission insists that isn’t the case, and that the natural geology “removes the need for complex, costly pressure vessels and large engineered structures” on the surface.
“We still use steel and engineered components where necessary, but the total material requirements are a fraction of those used in a traditional large-scale plant,” Frader said.
Ultimately, burying reactors is about quieting concerns that should be debunked head on, Emmet Penney, a historian of the industry and a senior fellow at the Foundation for American Innovation, a right-leaning think tank that advocates building more reactors in the U.S., told me.
“Investors need to wake up and realize that nuclear is one of the safest power sources on the planet,” Penney said. “Otherwise, goofy companies will continue to snow them with slick slide decks about solving non-issues.”
On energy efficiency rules, Chinese nuclear, and Japan’s first offshore wind
Current conditions: Warm air headed northward up the East Coast is set to collide with cold air headed southward over the Great Lakes and Northeast, bringing snowfall followed by higher temperatures later in the week • A cold front is stirring up a dense fog in northwest India • Unusually frigid Arctic air in Europe is causing temperatures across northwest Africa to plunge to double-digit degrees below seasonal norms, with Algiers at just over 50 degrees Fahrenheit this week.

Oil prices largely fell throughout 2025, capping off December at their lowest level all year. Spot market prices for Brent crude, the leading global benchmark for oil, dropped to $63 per barrel last month. The reason, according to the latest analysis of the full year by the Energy Information Administration, is oversupply in the market. China’s push to fill its storage tanks kept prices from declining further. Israel’s June 13 strikes on Iran and attacks on oil infrastructure between Russia and Ukraine briefly raised prices throughout the year. But the year-end average price still came in at $69 per barrel, the lowest since 2020, even when adjusted for inflation.

The price drop bodes poorly for reviving Venezuela’s oil industry in the wake of the U.S. raid on Caracas and arrest of the South American country’s President Nicolás Maduro. At such low levels, investments in new infrastructure are difficult to justify. “This is a moment where there’s oversupply,” oil analyst Rory Johnston told my colleague Matthew Zeitlin yesterday. “Prices are down. It’s not the moment that you’re like, I’m going to go on a lark and invest in Venezuela.”
The Energy Department granted a Texas company known for recycling defunct tools from oil and gas drilling an $11.5 million grant to fund an expansion of its existing facility in a rural county between San Antonio and Dallas. The company, Amermin, said the funding will allow it to increase its output of tungsten carbide by 300%, “reducing our reliance on foreign nations like China, which produces 83%” of the world’s supply of the metal used in all kinds of defense, energy, and hardware applications. “Our country cannot afford to rely on our adversaries for the resources that power our energy industry,” Representative August Pfluger, a Texas Republican, said in a statement. “This investment strengthens our district’s role in American energy leadership while providing good paying jobs to Texas families.”
That wasn’t the agency’s only big funding announcement. The Energy Department gave out $2.7 billion in contracts for enriched uranium, with $900 million each to Maryland-based Centrus Energy, the French producer Orano, and the California-headquartered General Matter. “President Trump is catalyzing a resurgence in the nation’s nuclear energy sector to strengthen American security and prosperity,” Secretary of Energy Chris Wright said in a press release. “Today’s awards show that this Administration is committed to restoring a secure domestic nuclear fuel supply chain capable of producing the nuclear fuels needed to power the reactors of today and the advanced reactors of tomorrow.”
Low-income households in the United States pay roughly 30% more for energy per square foot than households who haven’t faced trouble paying for electricity and heat in the past, federal data shows. Part of the problem is that the national efficiency standards for one of the most affordable types of housing in the nation, manufactured homes, haven’t been updated since 1994. Congress finally passed a law in 2007 directing the Department of Energy to raise standards for insulation, and in 2022, the Biden administration proposed new rules to increase insulation and reduce air leaks. But the regulations had yet to take effect when President Donald Trump returned to office last year. Now the House of Representatives is prepared to vote on legislation to nullify the rules outright, preserving the standards set more than three decades ago. The House Committee on Rules is set to vote on advancing the bill as early as Tuesday night, with a full floor vote likely later in the week. “You’re just locking in higher bills for years to come if you give manufacturers this green light to build the homes with minimal insulation,” Mark Kresowik, senior policy director of the American Council for an Energy-Efficient Economy, told me.
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The newest reactor at the Zhangzhou nuclear station in Fujian Province has officially started up commercial operation as China’s buildout of new atomic power infrastructure picks up pace this year. The 1,136-megawatt Hualong One represents China’s leading indigenous reactor design. Where once Beijing preferred the top U.S. technology for large-scale reactors, the Westinghouse AP1000, the Hualong One’s entirely domestic supply chain and design that borrows from the American standard has made China’s own model the new leader.
In a sign of just how many reactors China is building — at least 35 underway nationwide, as I noted in yesterday’s newsletter — the country started construction on two more the same week the latest Hualong One came online. World Nuclear News reported that first concrete has been poured for a pair of CAP1000 reactors, the official Chinese version of the Westinghouse AP1000, at two separate plants in southern China.
Back in October, when Japan elected Sanae Takaichi as its first female prime minister, I told you about how the arch-conservative leader of the Liberal Democratic Party planned to refocus the country’s energy plans on reviving the nuclear industry. But don’t count out offshore wind. Unlike Europe’s North Sea or the American East Coast, the sharp continental drop in Japan’s ocean makes rooting giant turbines to the sea floor impossible along much of its shoreline. But the Goto Floating Wind Farm — employing floating technology under consideration on the U.S. West Coast, too — announced the start of commercial operations this week, pumping nearly 17 megawatts of power onto the Japanese grid. Japanese officials last year raised the country’s goal for installed capacity of offshore wind to 10 gigawatts by 2030 and 45 gigawatts by 2040, Power magazine noted, so the industry still has a long way to go.
Beavers may be the trick to heal nature’s burn scars after a wildfire. A team of scientists at the U.S. Forest Service and Colorado State University are building fake beaver dams in scorched areas to study how wetlands created by the dams impact the restoration of the ecosystem and water quality after a blaze. “It’s kind of a brave new world for us with this type of work,” Tim Fegel, a doctoral candidate at Colorado State, who led the research, said in a press release.
Rob talks about the removal of Venezuela’s Nicolás Maduro with Commodity Context’s Rory Johnston.
Over the weekend, the U.S. military entered Venezuela and captured its president, Nicolás Maduro, and his wife. Maduro will now face drug and gun charges in New York, and some members of the Trump administration have described the operation as a law enforcement mission.
President Donald Trump has taken a different tack. He has justified the operation by asserting that America is going to “take over” Venezuela’s oil reserves, even suggesting that oil companies might foot the bill for the broader occupation and rebuilding effort. Trump officials have told oil companies that the U.S. might not help them recover lost assets unless they fund the American effort now, according to Politico.
Such a move seems openly imperialistic, ill-advised, and unethical — to say the least. But is it even possible? On this week’s episode of Shift Key, Rob talks to Rory Johnston, a Toronto-based oil markets analyst and the founder of Commodity Context. They discuss the current status of the Venezuelan oil industry, what a rebuilding effort would cost, and whether a reopened Venezuelan oil industry could change U.S. energy politics — or even, as some fear, bring about a new age of cheap fossil fuels.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is off this week.
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Here is an excerpt from our conversation:
Robinson Meyer: First of all, does Venezuela have the world’s largest hydrocarbon reserves — like, proven hydrocarbon reserves? And number two, let’s say that Trump has made some backdoor deal with the existing regime, that these existing issues are ironed ou to actually use those reserves. What kind of investment are we talking about on that end?
Rory Johnston: The mucky answer to this largest reserve question is, there’s lots of debate. I will say there’s a reasonable claim that at one point Venezuela — Venezuela has a lot of oil. Let’s just say it that way: Venezuela has a lot of oil, particularly the Orinoco Belt, which, again, similar to the oil sands we’re talking about —
Meyer: This is the Orinoco flow. We’re going to call this the Orinoco flow question.
Johnston: Yeah, exactly, that. Similar to the Canadian oil sands, we’re talking about more than a trillion barrels of oil in place, the actual resource in the ground. But then from there you get to this question of what is technically recoverable. Then from there, what is economically recoverable? The explosion in, again, both Venezuelan and Canadian reserve estimates occurred during that massive boom in oil prices in the mid-2000s. And that created the justification for booking those as reserves rather than just resources.
So I think that there is ample — in the same way, like, Russia and the United States don’t actually have super impressive-looking reserves on paper, but they do a lot with them, and I think in actuality that matters a lot more than the amount of technical reserves you have in the ground. Because as we’ve seen, Venezuela hasn’t been able to do much with those reserves.
So in order to, how to actually get that operating, this is where we get back to the — we’re talking tens, hundreds of billions of dollars, and a lot of time. And these companies are not going to do that without seeing a track record of whatever government replaces the current. The current vice president, his acting president — which I should also note, vice president and oil minister, which I think is particularly relevant here — so I think there’s lots that needs to happen. But companies are not going to trip over themselves to expose themselves to this risk. We still don’t know what the future is going to look like for Venezuela.
Mentioned:
The 4 Things Standing Between the U.S. and Venezuela’s Oil
Trump admin sends tough private message to oil companies on Venezuela
Previously on Shift Key: The Trump Policy That Would Be Really Bad for Oil Companies
This episode of Shift Key is sponsored by …
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Music for Shift Key is by Adam Kromelow.