by Open-Publishing - Wednesday 31 May 2006

Edito Energy USA South/Latin America William Fisher

by William Fisher

Amid the ever-escalating rhetoric between the United States and Venezuela, the president of the oil-rich Latin American country, Hugo Chavez, has been busily scoring points with low-income American consumers.

Under a program sometimes dubbed petro-diplomacy, Citgo, Venezuela’s wholly-owned gas and oil subsidiary, has been providing discounts of up to 60 per cent on heating oil to poor communities in the U.S.

The program is currently operating in Maine, Massachusetts, Pennsylvania, Delaware, Pennsylvania, Vermont, Connecticut, and Rhode Island. Most local politicians, desperate for ways to reduce energy costs for their constituents, have welcomed it with open arms.

Citgo says the program has benefited more than 180,000 households - and is now attracting some big-name supporters. In New York, the powerful Harlem Congressman Charles Rangel facilitated expansion of the program into upper Manhattan, and a new permutation has been enthusiastically embraced by former Massachusetts Representative Joe Kennedy.

Typical of the way the program works is the deal Citgo struck with three nonprofit organizations in the Bronx to deliver five million gallons of heating oil at 45 percent below the market price. Citgo says the deal will amount to a savings of $4 million for the 8,000 low-income households slated to benefit from the plan.

Citgo says it initiated the heating oil program late last year in an effort to help low-income families in the U.S. to cope with the cold winter and high oil costs. The Venezuelan government says the program costs Citgo relatively little because the oil is being supplied directly, without middlemen, who usually make substantial profits.

But Venezuela’s "oil for the poor" program has not all been smooth sailing. In Chicago last October, Citgo proposed to substitute diesel fuel for home heating oil, which is used only by a small number of Windy City residents. Instead, it offered a 40 percent discount on 7.2 million gallons of diesel to be used for Chicago’s public buses. Though the deal could have saved the city approximately $15 million, the offer was rejected by Chicago’s transit authority over the objections of other elected officials and labor groups.

Undeterred, Chavez is now proposing a second phase of the program. He told a delegation of beneficiaries of the program that in addition to the 40% discount, only 30% would go towards Citgo’s expenses and the remaining 30% would be set aside for a special local development fund, to help unemployed in the communities to set up cooperatives. The products of such cooperatives could then be sold to Venezuela, Chavez suggested. The idea was endorsed by Mr. Kennedy, a member of the U.S. delegation to Caracas and a key figure in facilitating the heating oil program in Boston via his not-for-profit Citizens Energy Corporation.

"This concept allows families to work out of poverty; it helps them by giving them the tools such as money to build a roof over their head, instead of just a one-shot benefit," said Kennedy.

Chavez also announced that the program will be doubled next year from its current level of 40 million gallons. "No one should believe that this is just a momentary interest," Chavez told the group. "Leave at ease and tell your neighbors of the communities you represent that the program will continue; it has just begun," he said.

Chavez insisted that the program was not designed to buy support in the U.S., as many critics claimed, but is rather an example of corporate responsibility because Citgo, which is now making large profits in the U.S., is now giving back to communities in which it does business. "Citgo has done good business in the U.S. We believe companies, along with making a profit need to have social responsibilities for the people they sell to," said Chavez.

Chavez pointed out that in the 20 years Venezuela has owned Citgo, the company never paid dividends to the Venezuelan state. Only in 2004 and 2005 has it begun to repatriate some of its profits to Venezuela, he said.

He also cited the program as "an example of his government’s efforts to move towards socialism, in which countries relate to each other on the basis of cooperation, solidarity, and complementarity." Venezuela also provides discounted fuel to other countries in Latin America.

Meanwhile, despite a State Department spokesman’s comment that the U.S. has "no objections" to Citgo’s offers, the Bush Administration continues to ramp up its war of words - and equipment - on Chavez and his allies, principally Cuba, Bolivia and, more recently, Iran.

The fiery Chavez has provided the administration of President George W. Bush a lot to respond to. He proposed a new free trade pact between Venezuela, Cuba, and Bolivia. He pledged to help Bolivia’s new President, Evo Morales, with $1.5 billion in energy investments. He also made it clear his country would remain a reliable oil-supplier to his role model, Cuban President Fidel Castro.

Bolivia has the second-largest natural gas reserves in South America after Venezuela. Venezuela’s state-owned oil company, PDVSA, and Bolivia’s state-owned YPFB, are expected to produce natural gas in a joint venture.

Chavez has also widened his estrangement from the Bush Administration by saying he does not believe that Iran ’s nuclear program is a front for secret efforts to produce an atomic bomb. "I don’t believe that the United States or anyone else has the right ... to prohibit that a country has nuclear energy," Chavez said at a news conference in London. He repeated a warning that any military strike against Iran would send the price of crude oil soaring above US $100 a barrel and trigger an enormous military escalation in the Middle East. He also called President Bush a "terrorist."

The Bush Administration’s retaliation has been swift, though of arguable value. The U.S. recently announced it would cease selling American-made military hardware to Venezuela, citing what it claims is a lack of support by Chavez for counter-terrorism efforts, according to a State Department official.

Venezuela lost no time in countering that it would buy from the Russians and sell off its fleet of American-made fighter planes - which are little more than a pile of scrap metal, since the U.S. has been withholding spare parts for the planes for some time.

Unwilling to be left out of what has all the appearances of a genuine "mouse that roared" international incident, Congress has weighed in with calls for an investigation.

Rep. Joe Barton, the powerful Texas Republican who is chairman of the House Energy and Commerce Committee, announced he would launch an investigation into possible antitrust violations by Citgo. Barton is the recipient of some $2 million in campaign contributions from the U.S. energy industry.

As reported in the New York Daily News, in a letter to the Houston-based Citgo, Barton demanded that company officials produce all records, minutes, logs,
e-mails and even desk calendars related to Citgo’s novel program of supplying discounted heating oil to low-income communities in the United States.

"The bellicose Venezuelan decided to meddle in American energy policy, and we think it might prove instructive to know how," Larry Neal, deputy staff director for Barton’s committee, told the Daily News.

But Rep. Ed Markey, a Massachusetts Democrat, said he was flabbergasted by Barton’s investigation. "The Republicans are on another planet when it comes to energy policy," Markey said.

Instead of doing something about skyrocketing oil prices, Markey said, the Republicans are probing "a charitable donation of heating oil to relieve the suffering of a few thousand American families."

U.S. Energy Secretary Samuel Bodman seemed to agree. He told CNN that the U.S. government has no problems with Venezuela’s "oil for the poor" offer. "We view it, as corporate philanthropy," he said, prompting some media outlets to comment that Mr. Bodman must have left his Administration talking points in his other suit.

While Mr. Chavez has become the most recent poster child for Latin American populism, the phenomenon has a long history south of the border. Latin American policy experts are encouraging both the Bush Administration and Mr. Chavez to lower the volume of the current over-the-top rhetoric and tit-for-tat diplomacy that they say can only further separate America from its troubled backyard.

Their fear is that the U.S. will succeed in elevating populists to heroes by backing Big Oil and acting as though every rhetorical extravagance by Chavez is another Cuban Missile Crisis - while Latin America’s urgent needs go unaddressed.

They worry that the road the U.S. is traveling looks very much like the one that resulted in what it calls America’s self-destructive Cuba policy.


Forum posts

  • I smell class warfare in operation here. The U.S. badly needs to work with Latin American countries to develop a unified Western hemisphere focussed on SUSTAINABLE economic development throughout the Americas. The United States itself is on the verge of needing massive economic redevelopment in infrastructure and industry.

    As mostly petroleum-based shipping methods become increasingly expensive and difficult to maintain, trade within the Americas will become more important.

    This could be a time of vast opportunity for joint development of a sustainable infrastructure and economy throughouut the hemisphere. It is up to the citizens of American countries to push for the types of international cooperation that could enrich us all. An American Union needs to happen to compete effectively with Europe and Asia and to build hemispherical leadership in sustainable development.

    We should be working at being better neighbors instead of pushing division and petty political squabbles. We need each other.

    Dan Stafford

  • I’m sure BushCo will invent some feeble, ill-founded excuse to invade Venezuela too. Although Chavez has a brain, unlike his American counterpart. Bush couldn’t steer a docked ship.

    • Invading Venezuela is like invading your grandmas house. Who is worth the cost of that?

    • Invading ANY country without provocation or attack is ILLEGAL in the world theatre. But that doesn’t stop Bush and the NeoCons from wanton destruction for the greater good of Israel.

      And, unfortunately the american public have been lulled to sleep concerning justice and fairness in world issues. They seem to believe it’s the right of the US to invade anywhere it cares to - for any reason - even if those reasons are LIES and FABRICATIONS. The US public, in general, prefers to view the world from their recliners with their remotes in their hands.

      I am a US citizen, but I’m deeply ashamed of my country and even more so, the man who was never elected to the highest office - GW BUSH (THE Terrorist)



    By Mike Blair

    While Washington dithers over exploiting oil and gas reserves off the coast of Florida, China has seized the opportunity to gobble up these deposits, which run throughout Latin America, the Caribbean and along the U.S. Gulf coast.

    The Chinese have forged a deal with Cuban leader Fidel Castro to explore and tap into massive oil reserves almost within sight of Key West, Florida. At the same time, Venezuelan President Hugo Chavez, who controls the largest oil reserves in the Western Hemisphere, is making deals to sell his country’s oil to China, oil that is currently coming to the United States.

    Meanwhile, a new left-wing populist regime in Bolivia has nationalized the natural gas industry, threatening to cut off supplies to the United States.


    There are new reports out circulating that Chinese firms are planning to slant drill off the Cuban coast near the Florida Straits, tapping into U.S. oil reserves that are estimated at 4.6 billion to 9.3 billion barrels. This compares with 4 billion to 10 billion barrels believed to be beneath the Alaska National Wildlife Refuge, where drilling is held up in Congress due to the objections of environmental groups which warn of endangering caribou. Permission to drill in the refuge, which experts are certain will not present any environmental hazard, has failed by just two votes in the Senate.

    As Chinese business increases its reach around the world, it is seeking oil, which it lacks domestically.

    After elections in Mexico in early July, when a new regime hostile to Washington is expected to take power, the United States might be without supplies of Mexican crude oil. The United States gets about 40 percent of its imported oil from Mexico and Venezuela.

    China is eager to tap into oil reserves in the Florida Straits and then make a deal with Castro to control it. The Chinese have already reopened an abandoned Russian oil refinery in Cuba. Much of the gas refined there is believed to be destined for Freeport in the Bahamas, where the Chinese, through front company Hutchison-Whampoa, has developed a massive port facility and airfield.

    With the refinery reopened and expanded it will also meet the needs of Castro.

    Sen. Larry Craig (R-Idaho) has introduced legislation to ease U.S. restrictions that prevent dealing with Cuba to drill in the Florida Straits. It is hoped that Florida regulations that prevent U.S. oil drilling off the state’s coasts could also be eased.

    The irony is that Chinese drilling could be even more of an environmental hazard since China is not as concerned about or equipped to deal with any potential ecological disaster as a result of a spill, said Craig.

    (Issue #22, May 29, 2006)

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    • If Congress had half a brain and wasn’t tethered to OIL companies, there would be legislation inducing and encouraging alternate energy through tax incentives. Unfortunately, the government can’t afford to lose any more money because they’ve broke the bank already with their ILLEGAL WARS for OIL.


  • FACT, Hugo chavez is much more popular among the people of Venezuela, than bush is in the united states and since he continues his nationalistic oil program, which is their RIGHT, as a soveriegn nation he has been on buSh’s hit list. So it’s not surprising that those in the military who tried to overthrow Hugo Chavez, where recognized by the the U.S. govt. and according to H.C., U.S. officials were seen talking to those same individuals, on the day of the coup.

    Hugo Chavez has done absolutely nothing to the U.S., only to try to remain independent from U.S. influence and domination, which is why he is persona non grata, to the the bush regime. Since U.S. foreign policy has always given itself the right to interfere, overthrow or coerce any goverment it wants,it has chosen to wage an extreme propaganda campaign against the democratically elected goverment of Hugo Chavez. Ironically the U.S. goverment and it’s corporate interests(UNOCAL)were willing to work with the Taliban in 1997, to build a pipeline in Afghanastan, a regime FAR FAR worst, than what ever you might think about the Venezuelan govt.( Google Unocal.taliban.1997), even though that wonderful business arrangement didn’t happen, it proves they pick and chose who they deal with not based on any moral values, or ethics but whatever is convenient or possiable at the time.