January 12, 2006

Venezuela donates more heating oil to US poor

By Jason Szep

WINDHAM, Maine (Reuters) - Venezuela expanded a controversial program on Thursday of subsidizing costly home-heating oil for the U.S. poor with a pact in Maine, upping the ante in a political brawl with President George W. Bush.

The donations deepen an ongoing spat between oil-rich Venezuelan President Hugo Chavez and Bush, who calls Chavez a threat to democracy in Latin America. Socialist Chavez says Bush is trying to undermine his political support.

Venezuela, where per capita income is about 1/10th that of the United States, donated 8 million gallons (36 million liters) of heating oil at a 40 percent discount to Maine, the third northeastern U.S. state to receive what Venezuela calls its "humanitarian aid."

"This helps Chavez portray America as fundamentally weak," said Bruce Everett, a former executive with the Exxon Mobil Corp who teaches petroleum economics at the Fletcher School at Tufts University in Massachusetts.

"We are supposed to be the world's only superpower, and we're taking charity from a very poor country," he said.

Donations to the U.S. poor by Citgo, Venezuela's state-owned oil company's U.S. division, now total an estimated $38 million in three states -- Maine, Massachusetts and New York. Rhode Island will receive a similar donation on Friday.

At a ceremony rich in political symbolism, an oil truck with a huge decal emblazoned with Citgo's orange logo backed into the driveway of the home of Mary and Malcolm Lyons, who are both nearly 90 years old, in the rural town of Windham.

"This is wonderful," said Mary Lyons, whose husband's small pension and social security benefits barely cover monthly heating bills that are up 40 percent from last winter following the surge in global oil prices.

Next to a table in her driveway where Maine Gov. John Baldacci signed Thursday's pact with Citgo's chief executive Felix Rodriguez, she thanked the Venezuelan government. "This is a big help," she said.


Flush with cash from soaring oil prices, Chavez has used his nation's petroleum wealth to secure closer ties with South American neighbors while taunting Washington by pushing his socialist ideas as an alternative to U.S. influence.

Venezuela, the world's No. 5 crude exporter, still supplies about 15 percent of U.S. oil imports.

Baldacci said the deal was not about politics: "We have over 24,000 low-income seniors who are making less than $12,000 a year and they really need this assistance."

He added that Citgo was the only major oil company to respond to an appeal by 12 U.S. senators for assistance this winter. "It's a year when big oil companies have record profits. We encourage other companies also to come forward."

But diplomatic analysts said the symbolism cannot be ignored. Chavez's public image, they said, stands to benefit at a time when high heating oil costs are a hot U.S. political issue, potentially complicating Bush's criticisms of Venezuela on issues ranging from human rights to Latin American diplomacy.

"This buys Chavez an enormous amount of visibility in the United States," said Ricardo Hausmann, director of Harvard's Center for International Development, and Venezuela's former Minister of Planning from 1992-93.

The subsidies in Maine will benefit about 48,000 families in the state's low-income home energy assistance program. Under the terms, the discount will be distributed in the form of $100 in heating oil benefits to each home, state officials said.

Everett at Tufts' Fletcher School said the public needs to question Chavez's motives and consider his weak human rights record in a country where the poor suffer from malnutrition.