Here’s How Trump’s Mission in Venezuela Could Impact the Middle Class
Written by
Heather Altamirano
Edited by
Angela Corry
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On Jan. 3, the world watched as President Donald Trump addressed Americans, saying the U.S. military had captured Nicolás Maduro, Venezuela’s embattled leader of 12 years, and his wife. The pair were flown to New York to face charges including narco-terrorism conspiracy, cocaine importation conspiracy, and possession of and conspiracy to possess machine guns, NPR reported.
As Americans grapple with the news, many are wondering how this unprecedented military move could affect life in the U.S., particularly for the middle class.
“When the U.S. gets involved in something like a pressure campaign or mission in Venezuela, the impact on the middle class doesn’t always show up in obvious ways–it’s less about global politics and more about your monthly budget,” said Danny Ray, founder of PinnacleQuote, a life insurance company.
From gas prices to inflation and federal spending, here’s what economists and finance experts say could be affected.
Gas Prices: Relief or Volatility?
According to Fergus Hodgson, CAIA, a financial economist and director at Econ Americas and author of “The Latin America Red Pill,” consumers could see gas prices drop at the pump.
“There is a high likelihood that gasoline prices will come down meaningfully, given less dependence on Canadian imports that require costly processing,” he said.
But not all experts agree. Peter C. Earle, director of economics and economic freedom at the American Institute for Economic Research, doesn’t expect much change in gas prices in the short term.
“Venezuela’s oil sector is severely degraded after years of underinvestment, mismanagement and sanctions, and most of its remaining reserves are heavy crude that is expensive to extract and refine,” he explained. “Even under favorable political conditions, restoring meaningful production would take years, not months, limiting any immediate impact on gasoline or heating costs.”
Another possibility is volatility in fuel prices. Venezuela sits on the largest proven oil reserves in the world (roughly 300 billion barrels). According to finance expert Andrew Lokenauth with Be Fluent in Finance, if Trump’s mission involves regime change or increased sanctions, it will tighten global oil supply, meaning higher gas prices.
“You’re looking at potential increases of 50 cents to $1 per gallon, which translates to about $600 to $1,200 more per year for the average family,” Lokenauth said.
Ray also believes gas prices could increase, putting a strain on middle-class households.
“Even small jumps in oil prices usually mean higher gas and heating bills,” he said. “For middle-class families, that hits right away, more money spent at the pump or to keep the house warm, less left over for everything else.”
Inflation Pressures
The middle class could be hit with inflation yet again, because according to Ray, when global events shake things up, prices tend to rise across the board.
“Higher oil prices mean more expensive shipping, which affects groceries, household items, even online shopping,” he explained. “Since middle-class families spend a big chunk of their income on basics, they feel inflation faster and harder.”
Federal Spending and Americans’ Taxes
Someone has to pay for military and humanitarian missions and they aren’t cheap. When the government spends billions on foreign interventions, that money comes from somewhere.
“It either adds to the deficit (which your kids pay for through higher taxes later) or requires cuts to domestic programs that middle-class families depend on,” Lokenauth explained. “Even a smaller Venezuela mission could run $50 to $100 billion-that’s money not going to infrastructure, education, or healthcare subsidies,” he said.
Immigration Flows and Wages
Venezuela’s crisis has already pushed nearly 8 million people to leave the country since 2014.
If Trump’s mission destabilizes things further before they improve, you’ll see more migration to the U.S. border, per Lokenauth.
“More migration means more pressure on local job markets, particularly in construction, services and hospitality,” he said.
When labor supply increases fast, wages stagnate.
“Middle-class workers competing for the same jobs face slower wage growth, which hurts when inflation is still elevated,” Lokenauth explained.
The Bottom Line
Some experts note that Trump’s mission in Venezuela will likely cause financial headaches for the middle class through higher energy costs, increased federal spending and potential wage pressure. Others caution that reopening Venezuela’s oil industry could help cap energy prices at the margin, driven by a slight increase in global supply.
However, “this would be a slow-moving, indirect effect, and energy prices will remain far more sensitive to global demand, OPEC decisions, refinery capacity and geopolitics than to near-term developments in Venezuela,” said Earle.
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