Venezuela's Oil Boom: A Look Back at Its Wealth

Venezuela was once one of the world's wealthiest nations, driven by the discovery of oil near Lake Maracaibo in 1914. By the 1970s, the country was nicknamed 'Saudi Venezuela' due to its vast economic growth and luxury lifestyle. However, decades of economic collapse have since driven nearly a quarter of the population to flee.

Recently, the US launched a military operation resulting in the capture of President Nicolás Maduro, who pleaded not guilty to charges in New York. US officials now plan to influence Venezuela's transitional government and attract investment from American oil firms to revive the country's broken infrastructure.

Historical records show that while oil wealth built modern cities, it also created deep social divides that shaped the country's political future.

Before the oil boom, Venezuela was a poor, rural nation defined by agricultural exports like coffee and cacao. Wealth was predominantly held by large landowners who formed a dominant elite.

The discovery of oil in 1914 transformed the country's economy. By 1940, Venezuela had become the world's third-largest producer of crude oil. This rapid growth attracted foreign investment and prompted the government to enact laws requiring oil companies to share revenues with the state.

During the 1950s and 1970s, Venezuela experienced periods of vast oil-fueled economic growth. This era defined a growing middle class that enjoyed luxury, foreign travel, and modernization. As the oil industry expanded, the national oil industry experienced exponential growth, shifting the economy away from agriculture.

Fueled by oil wealth, the capital city of Caracas experienced rapid expansion. The growing industry concentrated jobs and investment in the city, drawing migrants from rural areas in search of opportunity.

This migration led to the expansion of an oil-oriented middle class. According to history professor Miguel Tinker Salas, this group was influential but small: "They benefited tremendously from oil wealth and held managerial and professional positions. But they remained a small percentage of the population."

Neighborhoods like Sabana Grande became symbols of a rapidly modernizing capital, lined with department stores, cafés, and cinemas. The urban consumer culture was heavily influenced by the United States, with shopping and fashion reflecting American tastes. As Tinker Salas noted, "For a particular segment of the population, they wanted to see themselves as an appendage of Miami-Dade County."

Caracas also became an international hub for fashion and culture. From 1976 to 1982, Air France operated a weekly Concorde flight between Caracas and Paris, symbolizing the elite's alignment with Europe.

Despite the 'veneer of progress,' the oil boom left many behind, highlighting visible inequalities. While luxury brands and high-end shopping flourished for the wealthy, slums and informal settlements (barrios) surrounded urban centers.

Alejandro Velasco, a professor of Latin American history, described the transition for rural migrants: "Before the 1950s, barrios served as a kind of transitional space — people were in the city, but not fully of the city."

During the dictatorship of Marcos Pérez Jiménez in the 1950s, the government attempted to modernize the capital by razing barrios and forcibly relocating residents into high-rise superblocks. However, this project failed to bridge the gap. Velasco noted the paradox where "superblocks and barrios right next to each other" existed.

Even at the height of the golden era, access to basic necessities like water and sanitation remained limited in many neighborhoods. Rapid urban growth often outpaced infrastructure, leaving families to manage shortages on their own.

Today, the landscape has changed dramatically. The country produces less than 1% of global oil production due to what President Donald Trump has called "badly broken infrastructure."

On January 3, the US launched a military operation in Venezuela that resulted in the capture of President Nicolás Maduro. He pleaded not guilty to narco-terrorism and weapons-related charges in New York. The seizure of the country's leader, which Venezuelan officials have called a "kidnapping," has raised questions about sovereignty and legality.

US officials have stated they will seek to influence Venezuela's transitional government. They aim to attract investment from American energy companies to help revive the collapsed oil sector. This marks a significant shift from the country's history of relying on its own vast reserves to fuel its economy.