The Environmental Costs of Sanctions: Flaring and Venting in Venezuela

Michele Fioretti, Kavanaugh FitzPatrick and Alessandro Iaria

No 35512, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Economic sanctions on oil-producing autocracies change not only the quantity of oil but also how it is produced. Combining field-level production data with satellite measurements of gas flaring and atmospheric methane across six Latin American countries from 2012 to 2024, we study the U.S. sanctions on Venezuela. Per-barrel gas flaring in Venezuela rose about two-and-a-half-fold even as production fell by two-thirds, a pattern no unsanctioned neighbor shows, so environmental damage under sanctions is about two and a half times what a proportional decline in output would predict. Three channels generate this gap: the exit of small, dirty fields (composition) is more than offset by surviving fields running their infrastructure past design capacity (strain) and cutting their operating budgets (maintenance). We identify strain from the response of satellite-measured methane to the world price of naphtha, the imported diluent Venezuela's extra-heavy crude requires, and maintenance from a November 2022 U.S. Treasury license that allowed only Chevron to resume operations at its Venezuelan fields. A similar pattern of rising per-barrel emissions despite falling output appears under the sanctions on Iran (after 2018).

JEL-codes: F51 L71 Q35 Q53 (search for similar items in EconPapers)
Date: 2026-07
Note: EEE
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