Joe Kennedy on $100 Oil and His Deal with Hugo Chavez

by Maria Bartiromo

Oil prices jerked upward on Feb. 27, hitting a record $102 a barrel before falling back. Observers called it a play against a weakening dollar, but whatever the reason, it is cold comfort to millions of lower-income Americans who face increasing prices at the pump and the prospect of higher home heating bills. No one knows that better than former Massachusetts Representative Joe Kennedy, who runs the nonprofit Citizens Energy Corp., which provides discount heating oil to Americans in need in 15 states and the District of Columbia. The charitable work of Kennedy-eldest son of Robert F. Kennedy, godson of John F. Kennedy, and nephew of Senator Edward Kennedy-is not without controversy, primarily because the discounted oil is provided to Citizens Energy by the Venezuelan government of fiery U.S. critic Hugo Chavez.

Maria Bartiromo So here we are, looking at $100-a-barrel oil. What’s behind the sustained move in the price of oil?

Joseph P. Kennedy II Obviously there are a lot of forces at work. But the difficulty when you’re running a business like the energy business is that a slowdown, whether it’s caused by concern over a particular government or storms or military actions or even increased use- which the press has overblown-can have an extraordinary impact. And with the hedge funds and other financial players entering the commodities markets, we’ve seen an enormous eruption in price. It’s interesting, though, growth rates in terms of international use have not really gone up all that much in recent years and really gone up a hell of a lot in historic terms. The truth is, the industry simply has not taken these unbelievable profits and put them back into finding new sources of oil.

What about the development of alternative fuels? The U.S. oil industry in the last five years has made something like over $800 billion in profits. None of them is putting [profits] back into developing new sources of Crude. ExxonMobil (XOM) put zero percent [of profits] into renewable or alternative energy; BP (BP) six tenths of 1%; ConocoPhillips (COP), seven tenths of 1%; Shell (RDS), 1.3%; Chevron (CVX) 0.5%. And everybody says we’re running out of oil. You know, 74% of the earth’s surface-as we all learned in third grade-is covered with water. And we have developed less than 1% of the energy supplies contained underneath the surface of the ocean. So there’s nothing to suggest to me that right now there’s an imminent crisis.

What is the realistic future for alternative energy? I think it’s going to take years for wind power to become a significant player in the overall electricity market. Unfortunately, corn-based ethanol in the U.S. has a big mountain to climb in terms of becoming financially viable, and it may take a while for us to recognize that. Look at how much we depend on coal for electricity generation or how dependent on oil we are for transportation. I don’t think any of that is going to change dramatically in the next few years.

You just mentioned wind power, and the Citizens Energy Web site includes multiple photos of wind turbines. But your uncle, Senator Kennedy, teamed up with former Massachusetts Governor Mitt Romney to oppose a wind farm in Nantucket Sound. Is the “not in my backyard” mentality a problem for wind power? Oh, it’s a big problem not just in Nantucket Sound. It exists in many, many communities across our country and in other countries. We find the same thing in Canada, particularly in more wealthy areas around the lakes and the St. Lawrence and the like, where there are huge wind resources.

We’ve had a pretty mild winter in the Northeast. How strong is demand by lower-income people? [Citizens Energy] is assisting probably something on the order of 250,000 families. You know we have strictures in this country that do not all your electricity company or your gas company to shut people off in the middle of winter. But heating oil customers get shut off left, right, and center because they get served by Ma and Pa dealers that may have a few thousand customers. So if they have a gas stove, they will open the broiler door and turn the burners on to keep warm. You’re from New York, so you know that after the end of a very cold night in January or February, the next day you’ll see there were all sorts of fires in poor areas of the city. There is no reason in the world why the price of oil has doubled in a year. And, you know, that creates a bit of an inconvenience if you’re right. It creates some hardship if you’re middle class. But when you talk about the poor, the impact this has on 20% of the American public is just heartbreaking. And no one talks about it. No one cares. No one recognizes the devastation energy prices have on low-income, vulnerable people, particularly the elderly.

With the housing slump, and credit drying up, do you foresee demand climbing even higher? Demand for assistance is skyrocketing. These families get to a point where they’ve taken out an adjustable-rate mortgage and their interest rate gets jacked up no matter what [Ben] Bernanke does, and it just snowballs on them.

Will oil companies eventually face a windfall tax? I would certain hope so. Addressing our energy problems is going to mean breaking some eggshells in Washington.

The heating oil you distribute is provided at a deep discount by Citgo, the national oil company of Venezuela, whose President, Hugo Chavez, has been a fierce critic of the U.S. How do you respond to criticism that Citizens is being used as a propaganda tool by Chavez? You know, I wrote to every oil company and asked them to provide us with just a little bit of heating oil so that we could assist the poor. I do it every year. I did the same thing with every OPEC nation and every major crude oil exporter in the world. The only country and only company that wrote me back and actually provide us with over $100 million worth of assistance was Citgo and the Venezuelan people. Now somebody gives me $100 million to try to help a lot of poor people…I’m going to thank them and acknowledge what they did. Listen, 10% of all gasoline that people in the U.S. use comes from Venezuela. A huge portion of the heating oil we use on the East Coast comes from Venezuela. So people should hold themselves to the same moral standard they’re going to hold the poor to. If Chavez is an enemy, then anyone who believes that shouldn’t use his oil. Now the question is: Is he any more of an enemy than Saudi Arabia, where a woman gets arrested for being raped is sentenced to 200 lashes? Is that what we think is rational and normal?

Is there ever a line Chavez can step over where you would say: “You know what? We can’t take your oil.” Of course. And that would go not just for Chavez but for anyone who began to take serious actions against the interests of the U.S. But my goodness gracious, Hugo Chavez can quote Thomas Jefferson and Abraham Lincoln by heart. The American public’s view of President Chavez was formed by the speech at the U.N. [denouncing Bush], which was, in my opinion, a huge mistake. And I’ve told him that directly.

What was his reaction? He gets it, but he feels very strongly that the Bush Administration illegally tried to throw him out of office and put a puppet regime of the U.S. in place. So it’s definitely personal.

Who’s going to be the next President? I think it’s going to be Barack Obama. It has nothing to do with Hillary Clinton’s competence. I think so many women in America have had to deal with the glass ceiling, and it’s just heartbreaking when she was so close to winning. If she wins in Ohio and Texas, I think that this campaign will not be over, and it will go into a much more divisive and difficult fight. But you asked me a direct question about who I thought was going to win.

Warming Trend

With the cost of oil hovering over $100-a-barrel and the price of natural gas rising 60 percent over the last five years, fewer Americans can afford to stay warm.

Thankfully, there are kind and generous corporate citizens who stand ready to help those in need.

This week, Springfield resident Pia Hall got a chance to publicly thank officials from a natural gas heat assistance program that has helped her keep her home comfortable and safe this winter.

We’d like to add our thanks to the Citizens Energy/Distrigas Heat Assistance program for providing $150 credit for a natural gas bill to eligible households like Hall’s. Citizens Energy Chairman Joseph P. Kennedy II and Clay Harris, chairman and CEO of Distrigas, which has donated $1 million to keep the program going, were on hand to announce the donation.

Approximately 6,000 households across the state are expected to benefit from the program. It’s heartwarming to know that corporate responsibility is still a value in the Bay State.

$1 Million Goes to Heat Homes

SPRINGFIELD – City Native Pia Hall, and her family face a warmer and healthier winter thanks to a natural gas heat assistance program.

The Citizens Energy/Distrigas Heat Assistance Program provides $150 credit for a natural gas bill to eligible households. To qualify, those in the household cannot be eligible for federal fuel aid, but earn less than 60 percent of the median income of have exhausted their annual benefit.

“This $150 is literally going to be the difference in keeping my mom and daughter warm and healthy or going cold,” said Hall, who lives on Grenada Terrace. “I am just so grateful for the help.”

Citizens Energy Chairman Joseph P. Kennedy II came yesterday to announce the continuation of the program, which is fueled by $1 million each year from Distrigas.

Kennedy and others announced the funding during a press conference in front of Hall’s home.

Kennedy, accompanied by Mayor Domenic J. Sarno and Clay Harris, chief executive office of Distrigas, spoke of the rising cost of oil, which this week was hovering around the $100-a-barrel mark. Attending was U.S. Rep. Richard E. Neal, D-Springfield.

The price of natural gas, meanwhile, has increased 80 percent during the last five years.

“There is absolutely no way that poor people can keep up with that,” Kennedy said.

Sarno commented on the biting wind outside Hall’s home and asked those present to think on what it might be like in a house with no heat on a cold winter day.

“This is extremely important,” Sarno said of the program.

Since the program was launched in 2005, thousands of Massachusetts households have used it.

In Western Massachusetts, payments are made on behalf of customers of Baystate Gas, Berkshire Gas, Holyoke Gas & Electric, Westfield Gas & Electric and other companies.

This year, some 6,000 households across the state are expected to benefit.

For more information, call 1-866-GAS-9918.

Kennedy, asked at the end of the conference about Citizens Energy and its acceptance of oil from Venezuela President Hugo Chavez, said it was the moral thing to do.

“At the end of the day we are just trying to help people,” Kennedy said.

Kennedy added that critics should hold others to the same standard.

“Why am I called upon to defend Hugo Chavez, but Exxon isn’t called upon to defend Saudi Arabia?”

Springfield residents obtain fuel assistance through the New England Farm Workers Council. Mary Ann Kobylianski, program director, said the council, which oversees the Low Income Home Energy Assistance Program, currently has 9,310 applicants and will probably have upwards of 11,000 participants before the season is over.

Participants receive a tank of oil through the program and an extra 100 gallons was recently added, Kobylianski said.

The remainder of Hampden County is handled by the Valley Opportunity Council which will have 13,000 participants by the end of the season, Gail Piscane, director of energy programs said.

“We are expecting to see not a huge increase over last year, but a significant increase over last year,” Piscane said.

Good, Bad, Ugly

The Good: Thursday’s visit by Citizens Energy Corp.’s Joseph P. Kennedy II to Rapid City, where tribal officials thanked him and Venezuelan officials for help with high heating bills on their reservations.

The BAD: That Hugo Chavez, the anti-American president of Venezuela, is more generous with his charity to poor Native Americans who need help paying heating costs than any of the OPEC nations that the United States considers its friends and allies.

THE UGLY: The government-owned CITGO was the only major oil company in the world that responded to Kennedy’s pleas for discounted fuel oil three years ago.

The GOOD: Tax rebate checks that could begin arriving in mailboxes across the nation in May after Congress passed the economic stimulus plan into law on Friday. President Bush is expected to sign it this week.

The BAD: The extra $168 billion the stimulus package adds to the federal deficit.

The Ugly: Whether your check is for $300, $600, or $1,200, it’s money borrowed from your children. Or your children’s children.

The GOOD: The sun shone on state government this past week when a Senate committee sent not one, but two, open-records laws on to the Senate for action. One bill states a presumption of openness about government documents and the other establishes a simple, cost-effective resolution process when government agencies and citizens have disputes about open records. Rapid City voters should take a moment to congratulate Sen. ‘Mac’ McCracken for his affirmative committee vote and to urge all of their legislators to support both bills.

The Ugly: Spearfish comedian Gary Mule Deer’s hairdo for his Feb. 5 appearance on the ‘Late Show with David Letterman.” It was funny.

The Good: The possibilities for interfaith and intercultural dialogue that the museum exhibit, “A Blessing to One Another: Pope John Paul II and the Jewish People” presents to the citizens of western South Dakota when it arrives for a summer run in downtown Rapid City.

The Good: Nucor Corp.’s $1 gift to the South Dakota School of Mines and Technology’s metallurgical program. The steel company’s donation will fund an endowed professorship for metallurgical and steelmaking technologies.

The GREAT: Another successful Black Hills Stock Show & Rodeo, which wrapped up a 10-day run Feb. 3 in Rapid City. Concessions, vendor sales, crowds and per-head cattle prices were all up slightly from last year.

Tribes Express Gratitude for Gift of Winter Warmth

The nuances of Venezuelan President Hugo Chavez’ stormy relationship with the United States nothing to Iyonne Garreau of Eagle Butte.

Garreau, 75, is not interested in the critical scrutiny that swirls around Venezuelan-owned CITGO Petroleum and its partnership with Citizens Energy Corp., which this year alone funneled $21 million in heating assistance into 220 tribal communities in 13 states.

What matters to Garreau is that the $267 in heating assistance she received from CITGO bought her about 133 gallons of propane to heat her home.

“My, was I ever happy, I was really, really so thankful,” Garreau said. “If I had a direct line, I’d sure thank them with a letter or something.”

Speaking for hundreds of people like Garreau, tribal representatives from throughout the United States gathered Thursday at the Best Western Ramkota Hotel to extend their appreciation to the Venezuelan people and Citizens Energy Corp. for the help that arrived at a critical point in the winter.

The president of CITGO Petroleum, Alejandro Granado, Citizens Energy Corp. Chairman Joseph P. Kennedy II and the ambassador of the Bolivarian Republic of Venezuela, Bernardo Alvarez, were honored by music and dance and showered with gifts.

Founded by Kennedy in 1979, Citizens Energy Corp. is a nonprofit agency that funnels profits from commercial ventures into charitable programs.

CITGO was the only major oil company and Venezuela the only OPEC nation that responded three years ago when Kennedy sought discounted fuel oil to help low-income American families with winter heating bills.

The first year, CITGO provided discounted home heating oil. Since then, the program has expanded to include direct financial assistance, with much of that going to Native American tribes.

Winter heating-assistance funds from the federal Low Income Home Energy Assistance Program were exhausted when CITGO sent $400,400 to the Turtle Mountain Band of the Chippewa Indians, according to tribal Chairman David Brien of Belcourt, N.D. This was the first year his tribe has received the funds.

“It was 40 below zero,” Brien said. “It was zero, and the winds were blowing 23 miles per hour.”

The CITGO dollars helped many families coping with energy costs that are double what they were a year ago, he said.

Cheyenne River Sioux Tribal Chairman Joe Brings Plenty said 570 homes on the Cheyenne River reservation benefited from the $470,000 CITGO sent his people.

“During one of the coldest winters in the past eight years, and at a time of the greatest need, Citizens Energy, CITGO, and the people of Venezuela came through,” Brings Plenty said.

This is the second year that CITGO has provided energy assistance for Native Americans.

“So many tribes of people from all over the U.S. have come together because of us and this program,” Ambassador Alvarez said. “It’s a great experience and a lot of help that is truly needed.”

The ambassador challenged others, including the oil companies, to join Venezuela and CITGO in helping low-income people with the most basic of human needs: a warm home.

“We are giving a significant amount, but it’s not enough,” he said.

The impact of escalating fuel costs on low-income Americans is being ignored, according to Kennedy, a nephew of President John F. Kennedy and the son of Robert Kennedy.

“No one is talking about it nationally,” he said. “No one is having this conversation.”