Venezuela's Citgo Oil Company Has U.S. Roots
ROBERT SIEGEL, host:
In one sense, South America's reach extends to Massachusetts and to New York. Winter has driven up demand for heating oil, and residents of those two states are getting discounts from Citgo, an arm of Venezuela's national oil company. NPR's Scott Horsley reports on the business which is now controlled by Hugo Chavez.
SCOTT HORSLEY reporting:
Citgo may be a Venezuelan company now, but its roots are all American. Founder Henry Doherty engineered the first nighttime lighting for the Statue of Liberty, and the 96-year-old company's probably best known for its landmark sign near Boston's Fenway Park. Williams College historian Karen Merrill says Citgo--or City Service, as it was first known--followed the fate of many American oil firms, looking abroad for crude oil when its domestic fields began to dry up.
Ms. KAREN MERRILL (Williams College): When you look at the arc of City Service, it's a company that's very much a homegrown, American company getting oil from Texas, Oklahoma, Kansas. Of course, what we've seen in the last 30 years is declining production.
HORSLEY: By the late 1980s, Citgo refineries in the US were getting more than half their oil from Venezuela. Petrovesa, Venezuela's national oil company, bought Citgo in 1990.
At the time, Petrovesa was still behaving much like a multinational firm, but that changed when President Hugo Chavez took power seven years ago. Pomona College historian Miguel Tinker-Salas, who studies the Venezuelan oil industry, says Chavez has turned Petrovesa into more of an arm of the national government. He's lobbied OPEC to raise oil prices, and both Chavez and Petrovesa have benefitted from soaring prices over the last two years.
Mr. MIGUEL TINKER-SALAS (Pomona College): The government is now using the funds from Petrovesa to fund a series of educational missions, cultural missions, social missions. And part of the slogan within Venezuela is that Petrovesa is (Spanish spoken), Petrovesa now belongs to everyone and not simply to the old oil elite.
HORSLEY: Chavez was briefly ousted from power in 2002, but regained his presidency and now enjoys widespread popularity at home. Petrovesa, too, has recovered somewhat from a crippling strike three years ago, but analysts say Venezuelan oil production still lags due to a lack of investment and experienced employees, since Chavez fired half the company's workers.
Venezuela remains the fourth-biggest supplier of oil to the United States, and the US, in turn, is Venezuela's biggest market. Terrence Murray of Energy Intelligence says that interdependence is unlikely to change, even as Chavez makes noises about finding customers elsewhere.
Mr. TERRENCE MURRAY (Energy Intelligence): He's been courting China. The state oil company this year opened a marketing office in Beijing. So he's officially saying that he wants to lower his US dependence, but it's a lot of talk and it's going to be very difficult to do.
HORSLEY: Even with today's high oil prices, most Venezuelans live in poverty. Many are much worse off than the poor Americans who stand to benefit from Citgo's discount heating oil. Still, the heating oil earmarked for Boston and New York's poor this fall represents less than one day's exports from Venezuela. Murray says it's an inexpensive way for Chavez to goad the Bush administration.
Mr. MURRAY: For him, it's mostly a way to show his people that, you know, `The greatest power in the world is also unable to provide heating oil to its poor. And so here I come, and I will give it to you at a good price.' For him, it's great politics.
HORSLEY: Massachusetts Congressman William Delahunt, who helped broker the Massachusetts deal, expects more discount oil sales to follow. He says for Citgo, the sales represent good foreign policy and good business.
Representative WILLIAM DELAHUNT (Democrat, Massachusetts): I've had numerous people stop me on the street back in Massachusetts and say, `I'm going to fill up my car at Citgo stations.'
HORSLEY: Delahunt says he'd be happy to negotiate similar deals for discount oil with Citgo's American competitors. Scott Horsley, NPR News.
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