Connecticut Latest State to Accept Venezuelan Oil

Caracas, Venezuela, March 2, 2006—Residents of Connecticut become the latest northeasterners to receive discounted heating oil from the Venezuelan owned oil company Citgo, after the state’s attorney general dismissed questions by the state governor that the program might be illegal.

Record crude oil prices in the wake of hurricanes Katrina and Rita contributed to the increase in heating oil prices. According to the US Department of Energy, 8.1 million of the country’s 103 million households use heating oil as their main heating fuel. Of these, 82 percent are in New England and the Central Atlantic States.

But the deals brokered, which in most cases give eligible low-income houses a 40 percent break on their heating bills, have not come without controversy. Critics of the program say that Venezuelan President Hugo Chávez, an outspoken critic of the Bush administration, is merely trying to gain political capital within the US or interfere in energy policy, a complaint which program proponents chalk up to sour grapes, since, as a major supplier of oil to the US, Venezuela is already a force in energy policy.

Others have gone so far as to question the legality of the program. 

Republican Connecticut Governor M. Jodi Rell, for instance, raised questions to her state’s Attorney General, asking him to address the “legality of the state of Connecticut sanctioning participation in [the] program.” 

Richard Blumenthal, Connecticut’s Attorney General, responded that the program was “consistent with [Connecticut’s] laws.”  

Though Rell’s request appears to have been resolved, it echoes that of an ongoing inquiry into Citgo initiated by Rep. Joe Barton, R-TX, chairman of the House Energy and Commerce Committee, and Ed Whitfield, R-KY, chairman of the Subcommittee for Oversight and Investigations. Last month, the sent a letter to Citgo saying, “We want to understand whether the beneficiaries are being selected in an objective, equitable fashion, or whether this is merely part of a larger political agenda.” 

In 2004, Barton received $224,398 in campaign contributions from oil and gas interests, the second highest of any candidate running for House of Representatives, and Whitfield received $15,500, according to the Center for Responsive Politics.  

Larry Neal, deputy staff director for Barton's committee commented on the inquiry, saying, "The bellicose Venezuelan decided to meddle in American energy policy, and we think it might prove instructive to know how."  

Felix Rodriguez, CEO of Citgo, had offered an explanation for the policy in January, at the opening of the Pennsylvania program. "After Hurricanes Katrina and Rita, oil companies were asked to help Americans in need. We are happy to respond, by offering people here in Philadelphia help this winter, and we hope that no one has to make sacrifices to stay warm," said Rodriguez.

Citgo’s offer came as Congressional attempts to elicit funds for discounted heating oil out of petroleum companies failed.

In response to one such request, Jim Mulva, the CEO of Conoco responded, "We feel it's not a good precedent for one industry to fund a program as such. We think that's a responsibility of the government."

However, the initial idea for selling discounted heating oil to the United States came from Venezuelan President Hugo Chávez, and pre-dated the hurricanes. In late August, Chávez first mentioned his intention to supply discounted oil to low-income US communities on a trip to Cuba. The next week, on his Sunday TV show Aló Presidente he reiterated his plan, saying, “There is a lot of poverty in the US…Many people die of cold in the winter…We could have an impact on seven to eight million persons.”

Originally, much of the negotiation between Citgo and those trying to broker the deal in the US was to ensure that all benefits of the program would go to intended recipients, rather than middlemen. Cities and states have worked this deal out in different ways. Connecticut’s Attorney General laid out the program was intended to work within his state, “Citgo has offered to sell—over a period of weeks—about 4.8 million gallons of heating oil to Citizens Energy, a Boston-based non-profit energy company, at a 40% discount from the wholesale price to Global Oil, a large heating oil wholesaler. Pursuant to its agreement with Citgo, Citizens Energy will use the profits from the sale of this oil to provide financial assistance to heating oil customers in Connecticut.”

According to New York Daily News, the average Massachusetts resident would save about $180 every three weeks. So, despite the political upheaval surrounding the program, recipients of discounted oil across the Northeast have been pleased.

“[Chávez’s] biggest crime is he's a socialist, but he's not a fascist” Elaine DeRosa, manager of a low-income child-care center in Massachusetts told the AP. "It's going to help a lot of low-income people who the U.S. government isn't talking about.”

Alan Francis, an ironworker, echoed her comments. “It felt like Christmas,” he told the AP. “This extra 53 gallons was awesome.”