Citgo Brings Discounted Heating Oil to Region
Tuesday, November 21, 2006
At 10 a.m. today, Minnie Davis, a 65-year-old widow who lives with three of her grandchildren on North Capitol Street, is scheduled to get some unusual visitors -- the Venezuelan ambassador, the chief executive of Citgo Petroleum and former congressman Joseph P. Kennedy II.
The occasion: The arrival of a Venezuelan-backed program to bring 7.5 million gallons of deeply discounted heating oil to as many as 37,000 low-income households in Maryland, Virginia and the District and free heating oil to some homeless shelters.
The program has the blessings of Venezuela's populist President Hugo Chavez, who has used it to demonstrate that he cares about the poor in the United States as well as Venezuela -- while tweaking President Bush, who he called "evil" in a September speech at the United Nations.
Many people have dismissed the assistance as a publicity stunt, but for some, it will have a real impact nonetheless.
Last year, working through Kennedy's Citizens Energy, the program reached people in Massachusetts and other parts of the Northeast. Now the program has been extended to the nation's capital.
It works like this: Citgo, a wholly owned subsidiary of Petroleos de Venezuela, is providing heating oil at a 40 percent discount to Citizens Energy, which Kennedy started during the oil shock of the late 1970s to help low-income people grapple with high energy costs. His company then provides up to 200 gallons of discounted heating oil not only to the very poor but also to people who earn too much to qualify for federal heating oil assistance but who still earn little enough to be struggling.
Citizens Energy is targeting 400,000 households in 16 states. If Citizens Energy reached all the target households, Citgo's discount -- about $1 a gallon -- would be worth $40 million. But because most people do not know they are eligible or how to take advantage of the program, the actual number who end up receiving aid might be a little more than a tenth as much.
Is it genuine concern on the part of Citgo and Chavez, or is it a public relations stunt?
"It's not only morally righteous, it's good business," Kennedy said in a telephone interview yesterday. "When you're selling to the world's largest market a gigantic percentage of your overall sales in crude oil, you take a little percentage and show that you have concerns about how low-income people are going to keep up with the enormous price of keeping warm."
That doesn't appear to be self-evident to other oil companies or members of the Organization of the Petroleum Exporting Countries. Kennedy said yesterday that he had written to every OPEC member and every major oil company but that Citgo was the only one that agreed to help.
At the same time, Kennedy said, "when you really stop and think about it, last year, Venezuela sold the United States 556 million barrels of crude oil and product. We are now topping off one-half of 1 percent, which they are selling at 40 percent off, which is effectively last year's full price. Let's keep things in some perspective."
David McCollum, a spokesman for Citgo of Houston, said the company initiated the program after members of Congress appealed after Hurricane Katrina sent prices soaring last year.
Though it might seem odd that Venezuela -- where per capita income is only about $4,810, a little more than one-tenth of U.S. per capita income -- would be giving aid to the United States, McCollum said that the heating oil assistance would not be depriving Venezuelan citizens.
"The product we are using is heating oil, and obviously it is never used in Venezuela," he said. "It's not that cold. So we're not taking anything away from the people of Venezuela."
He said the company expected the program to cost Citgo, which refines and markets oil products in the United States only, between 1 and 3 percent of the company's profit if everyone eligible took advantage of the offer.