Venezuelan warmth

Joseph P. Kennedy (right) with Representative Bill Helahunt and CITGO executives pull a fuel hose to a house during a ceremony announcing a plan for discounted oil for low-income families. -

Venezuelan President Hugo Chavez decides to supply oil to poor Americans at discounted rates even as the Bush administration continues to use a vulnerable section of the population to secure the Iraqi landscape for oil companies that do not benefit the U.S. poor.

WHERE I live, winter has settled in. For us, winter means a radical drop in the temperature (below freezing is normal), shorter days (the sun sets at around 4 p.m.) and snow on the ground. Seasoned residents of New England turn to the Farmer's Almanac to find out what the winter might be like. Published continuously since 1792, this remarkable book has a good track record on its weather prediction. The 2006 edition warns us that this winter will have record snowfalls and it will be colder than previous years. Our homes are heated by natural gas or oil, and with record fuel prices the average person in the U.S. State of Massachusetts faces a dire winter. Oil analysts warned us months ago that prices would be high this winter, mainly because of the Iraq war and the devastation of refineries near New Orleans during Hurricane Katrina. In early September, the U.S. Department of Energy predicted that for New England, the average consumer would have to pay $1,486 to heat his or her home this winter, 16 per cent more than last year. Nothing could be bleaker for a household on a tight budget.

On September 20, 2005, Venezuelan President Hugo Chavez did a radio interview in New York City while in town for the United Nations summit of world leaders. Talking to Juan Gonzalez and Amy Goodman on their show, Democracy Now, President Chavez offered oil at reduced prices to the U.S. poor. Ten years ago, Venezuela's state oil company Petroleos de Venezuela bought CITGO, a century-old oil-marketing firm based in Houston, Texas. Now, Chavez told the director of CITGO, Felix Rodriquez, to turn over 10 per cent of the oil refined in the U.S. by CITGO to poor customers at a reduced rate. The U.S. Census Bureau estimated that in 2004, as many as 37 million Americans lived in poverty. To qualify to be poor, a family of four must make less than $19,307, which means that the estimated cost of heating oil will be 8 per cent of its budget. CITGO's plan would be a lifesaver. "Well," said Chavez on the radio. "Let's hope that there's not going to be any obstacle by the government opposed to this project being implemented."

Of the 435 members of the U.S. House of Representatives, only two took Chavez up on his offer. Both Bill Delahunt of Massachusetts and Jose Serrano of New York are part of the "Out of Iraq" Congressional Caucus that opposed the war in 2003 and now call for an immediate withdrawal of U.S. troops. In addition, both Delahunt and Serrano are warm supporters of the Bolivarian Revolution led by Chavez. In 2002, as President George W. Bush backed the coup against Chavez, Delahunt founded the Grupo Boston, an inter-parliamentary exchange between the U.S. Congress and the Venezuelan National Assembly. It is, therefore, not a surprise that they bucked Washington D.C. and turned to Caracas on the question of oil. CITGO will provide 12 million gallons of heating oil at a discount of 40 per cent below market value to the residents of Massachusetts, and eight million gallons to the residents of the Bronx in New York. "Our objective is simple," said Rodriquez of CITGO, "to help people of limited means through the winter. No one should have to choose between heat and medicine or food."

"With temperatures dropping and oil prices soaring, we're all worried sick about people without the means to heat their homes," said Congressman Delahunt. "It is gratifying that at least one major oil company is willing to step in to help voluntarily and at its own expense." The comment came days after the top executives of five oil companies told the U.S. Senate that they would not offer any discounts on the price of heating oil. Chairmen from ExxonMobil, Chevron, ConocoPhillips, BPAmerica and Shell Oil heard Senator Barbara Boxer (Democrat of California) remind them that in the third quarter of this year their firms reported collective earnings of almost $33 billion. "People are concerned about fairness and justice at a time of sacrifice," Boxer said. "Your sacrifice appears to be nothing."

Lee Raymond of ExxonMobil admitted that the high price of oil would "put a strain on Americans' household budgets". However, he argued that the petroleum industry needed to claim profits in this cycle so as to use the earnings for exploration and for lulls in the market. When a Senator asked if the U.S.-based oil firms would consider a donation towards a government fund to support the heating needs of low-income households, ConocoPhillips' James Mulva said: "As an industry we feel it is not a good precedent to fund a government programme." These oil executives are motivated by the patriotism of the bottom line, while CITGO has, without governmental urging, created a programme to benefit ordinary Americans.

If Mulva felt chary about funding a government programme, the U.S. government had few qualms about using its power to benefit these very firms in Iraq. Just before the invasion of Iraq, Mulva's colleague at ConocoPhillips, Archie Dunham, said: "We know where the best [Iraqi] reserves are [and] we covet the opportunity to get those some day." Shell Oil also noted that it wanted to "establish a material and enduring presence in the country". Iraq has the third largest known oil reserves on the planet (10 per cent of the total), and their on-shore location makes them extractable at very low costs. For this reason, the current U.S. Vice-President and then head of the oil services firm Halliburton, Dick Cheney, told the Institute of Petroleum in 1999: "While many regions in the world offer great oil opportunities, the Middle East [West Asia] with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies." As Vice-President in early 2001, Cheney's energy task force noted: "The Gulf will be a primary focus of U.S. international energy policy." The beneficiaries of this government policy again will not be the average citizen, but the major U.S.-based oil firms.

In the early days of the U.S. occupation of Iraq, administrator Paul Bremer and the Interim Oil Minister Thamir al-Ghadban promised that the oilfields would not be sold to private firms. In fact, the ownership of the fields themselves is not a preferred option for oil companies, most of whom prefer a favourable Production Sharing Agreement (PSA) instead. The outline for this policy developed in the "Oil and Energy" working group of the U.S. State Department's Future of Iraq project. Its report noted that Iraq "should be opened to international oil companies as quickly as possible after the war", and that the government "should establish a conducive business environment to attract investment of oil and gas resources". Further, the working group specifically pointed to the use of PSAs because these allow firms a financial and legal advantage. The firms will bring in investment, and they will develop the fields. The profits reaped from the fields will first go towards paying off their investments, tax-free (this is called "cost oil"). Once the investment is recouped, the firm will share the profits as agreed with the government (this is called "profit oil"). In addition, they are protected from "adverse legislation".

Ibrahim Bahr al-Uloum, an exile based in London with a degree in petroleum engineering from the University of New Mexico, was a member of the "Oil and Energy" task force. Under the occupation, al-Uloum became the Oil Minister, a post he holds till now (briefly, al-Uloum's former adviser Thamir al-Ghabdan took over for him). In the October 2005 Constitution, the oil section notes that the policies of the government will rely "on the most modern techniques of market principles and encouraging investment". The PSA policy has gone into effect, and the Iraqi Oil Ministry is negotiating with the very oil companies that refuse to consider a price reduction for the U.S. working poor. In November, a consortium of think tanks released a report entitled "Crude Designs: The Rip-Off of Iraq's Oil Wealth" (the principal author is Greg Muttitt of PLATFORM), which showed that the PSA policy "would cost Iraq between $74 billion and $194 billion in lost revenue, compared to keeping oil development in public hands". The windfall profits to the U.S.-based oil companies will come, in addition, through the provision of security funded by the U.S. and Iraqi taxpayers. Iraq is the free lunch of these oil executives.

Meanwhile, in Quincy, Massachusetts, Linda Kelly and her family of five are happy to get their Christmas present early from Santa Chavez. "He's doing the right thing," said Kelly to a journalist from Seattle Intelligencer. "The people of Venezuela are lucky to have him. That's the way government is supposed to be taking care of the little guy." Kelly's town has already lost two of its residents to the Iraq war. Last year, a suicide bomber killed Army Private Norman Darling, who joined the forces to give his four-year-old daughter Camryn a better life. In September 2003, a roadside bomb killed Sergeant Todd Caldwell. His mother, Gladys, called upon mothers like her "to get up in arms and call Senators and say, `We want these guys home because they're getting killed off.'" Caldwell was the 285th U.S. soldier killed in Iraq. As Venezuelan oil at discount prices entered his neighbourhood, the 2,000th soldier was killed. The Bush plan in Iraq requires the pacification of the resistance before any oil company will be comfortable enough to invest its windfall profits into the laden oilfields. This means that more of the U.S. poor from places like Quincy will be out there securing the Iraqi landscape for oil companies who do not benefit them. Chavez' action not only helps people like Linda Kelly but also shows up the inhumanity of the war-for-oil policy that absorbs the White House and the U.S.-led oil firms.