The NewStandard ceased publishing on April 27, 2007.

Chicago Turns Down Discounted Venezuelan Oil

by Jessica Pupovac

As Chicago's poorest face an increase to already-high public transit fees, the city is ignoring an offer of discounted diesel fuel to benefit low-income people.

Chicago; Dec. 28, 2005 – The Chicago Transit Authority is refusing an opportunity to alleviate commuting costs for hundreds of thousands in the Windy City's low-income neighborhoods. Instead of accepting deeply discounted fuel from the Venezuela-owned Citgo Petroleum Corporation, the city is instead raising fares to solve budget shortfalls.

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In an October meeting with representatives from the Chicago Transit Authority (CTA), the city's Department of Energy and other city officials, Citgo unveiled a plan to provide the Chicago with low-cost diesel fuel. The company's stipulation, at the bidding of Venezuelan President Hugo Chavez, was that the CTA, in turn, pass those savings on to poor residents in the form free or discounted fare cards.

But two months later, despite claims of a looming budget crisis, the CTA president "has no intent or plan to accept the offer," according to CTA spokesperson Ibis Antongiorgi. She gave no explanation.

According to Venezuela’s consul general in Chicago, Martin Sanchez, the CTA has yet to inform his office of its decision to decline the discount offer.

In place of the proposed discount, which the CTA apparently does not want Chicagoans to even know about, budget shortfalls will be addressed by fare hikes. Chicagoans who are unaware of the Venezuela offer will be hit with an increase of 25 cents per ride next month, and discounted route-to-route transfers will be eliminated for passengers paying cash.

The CTA relies on the US federal government – which is in a constant war of words with Venezuelan President Chavez – for much of its funding.

"This is going to hurt the poor and the minority people, like me," said Dorothy Chew, resident of Humboldt Park, where one-third of residents live below the federally recognized poverty level – currently just $16,000 for a family of three. Chew relies on the CTA to get to work and to Chicago Commons, where she attends classes daily in preparation for taking her GED. Since she rarely has money to invest in a fare card, she will be forced to pay for transfers the majority of the time.

Chew's classmate, Linda Cox, works a minimum-wage job and has been a Public Aid recipient for 15 years. She also relies heavily on public transportation.

"I only earn $560 a month and of that, over $200 a month goes to my bus fare," Cox told The NewStandard. "I have a 15-year-old and a 17-year-old who also need to get to school. If they change the prices and take away transfers, there are going to be a lot of days missed. I already see no money at the end of the month."

The offer of discount fuel is not just confined to Chicago. Over the Thanksgiving holiday, the first of Venezuela's "oil-for-the-poor" programs in the US was launched. Citgo struck a deal with three nonprofit organizations in the Bronx to deliver 5 million gallons of heating oil at 45 percent below the market price. The deal will amount to a savings of $4 million for the 8,000 low-income households slated to benefit from the plan.

"This is going to hurt the poor and the minority people, like me." -- Dorothy Chew

Citgo has made a similar arrangement with Citizens Energy Corp. in Boston for the sale and distribution of 12 million gallons, saving low-income and elderly residents there a total of $10 million. The company's website says that it expects to expand the program to other boroughs in New York City and that it is exploring the possibility of offering discounted fuel to residents in Maine, Rhode Island, Connecticut and Pennsylvania.

However, in all of Illinois, only about 12,000 households use heating oil.

So instead of fuel for heat, Citgo representatives offered the CTA a 40-50 percent discount on diesel fuel for buses to benefit Chicagoans most in need of relief from soaring oil and gas prices this winter.

"We didn't know how else to reach enough people," said Consul Sanchez.

Another difference between the Chicago offer and the programs enacted in the Northeast is that Citgo proposed to work with a government agency, rather than nonprofit organizations. The CTA relies on the US federal government – which is in a constant war of words with Venezuelan President Chavez – for much of its funding. In fact, just weeks after Citgo made its offer to the CTA, Congress signed the Federal Transportation Appropriations bill, allocating $89 million in infrastructure project funds the CTA had been seeking for years.

Representatives from the US State Department and city officials, including Aldermen involved in the negotiations and the Chicago Mayor's Office, refused to respond to queries about whether international politics played any part in the CTA's rejection of Citgo's offer.

Some critics of President Chavez say his offer of cheap fuel to low-income communities in the US is a political ploy to win the support of the American people. Larry Birns, executive director of the progressive think tank, Council on Hemispheric Affairs, said Chavez is trying to counter Bush administration criticisms with "petro-diplomacy." Birns, who criticizes both US policy toward Venezuela and Chavez’s confrontational style, told TNS, "There is a certain amount of humor involved in needling the Bush administration for neglecting its own while attempting to stand tall in Latin America."

However, as Mark Weisbrot of the Center for Economic and Policy Research – another progressive think tank – pointed out, the Venezuelan government has been providing cheap fuel to several countries in Latin America. Weisbrot is a staunch supporter of the Chavez administration.

"It is part of [Venezuela's] policy to compensate for the impact of the high oil prices on poor people," he said. "They don't have any grudge against the American people; it's just the Bush administration that they don't like."

Consul Sanchez echoed this sentiment. "Any corporation that makes a big profit in a community owes that community something in return," he said. With one of Citgo's three light-oil refineries located in nearby Lemont, 30 minutes outside the city, Sanchez said, Venezuela has "a special relationship with people and community organizations in Chicago."

There remains no sign, however, that the government of Chicago will take Citgo and Venezuela up on the unilateral offer.

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The NewStandard ceased publishing on April 27, 2007.


Jessica Pupovac is a contributing journalist.

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