Stateline Story

As U.S. Heating Aid Drops, Venezuela Chips In

Close to 200,000 poor families in 15 cold-weather states - in every Northeastern state except New Hampshire - can thank controversial Venezuelan President Hugo Chavez for helping them heat their homes this winter.

The Venezuelan-controlled oil-refining company, Citgo Petroleum Corp., donated 45 million gallons of free home heating oil this winter in a move that bought good publicity for the country's socialist leader, who famously called President Bush "the devil" in a 2006 United Nations speech .

But New Hampshire 's lack of participation in this year's free-oil program shows that accepting oil from Chavez, a frequent critic of the U.S. government, touches a political nerve.

"There's the thought that by participating we're somehow helping Venezuela and Chavez and that it's not something good for the U.S. government," said Gale Hennessey, director of Southern New Hampshire Services , which works with the state to administer aid to low-income households.

Venezuela's offer of free oil this winter came as the U.S. economy was slumping, federal assistance through the Low Income Home Energy Assistance Program (LIHEAP) had dropped and home heating-oil prices hit a record high at more than $3.50 a gallon, according to the U.S. Department of Energy's Energy Information Administration database of monthly prices since 1990.

The almost 200,000 American families helped by Venezuela this winter is small compared to the almost 6 million families helped through LIHEAP. But LIHEAP was able to help only about 16 percent of families needing assistance, so Venezuela 's program helped to fill a void until its supplies were exhausted early this winter season.

Before this winter, discounted Venezuelan oil was distributed through Citgo to families in need. In 2006, Houston-based Citgo began working with Citizens Energy Corp. , a nonprofit organization run by former U.S. Rep. Joseph Kennedy II (D-Mass.) that worked independent from the states but with their cooperation.

New Hampshire Gov. John Lynch (D) shied away from accepting Venezuela 's discounted oil after U.S. Sen. John Sununu (R-N.H.) slammed the idea in 2006. "This is a disgrace, and New Hampshire should take no part in such a tragic and misguided charade," Sununu said, according to the Portsmouth Herald on Feb. 5, 2006. "(Chavez) is selling Venezuela 's assets at cut-rate prices while his country languishes in poverty and essential infrastructure crumbles."

But New Hampshire now appears to be reconsidering as it finds itself alone in the Northeast's Frost Belt, where 82 percent of the nation's heating oil was used in 2006.

"Initially, receiving heating fuel from Venezuela would have required negotiating directly with that government at a time when Hugo Chavez was playing politics with heating-fuel assistance to the poor. Over time, the program has changed," Colin Manning, Lynch's spokesman, told Stateline.org in an e-mail. Further "assistance through Citizens Energy is something the governor could consider moving forward," he said.

Hennessey of Southern New Hampshire Services said he would favor accepting outside help for low-income residents struggling to heat their homes. "LIHEAP basically fills the typical homeowner's tank once, maybe twice, a year, and people are filling it five or six times," he said. "If we can find a way to reduce the tremendous cost of energy through using (Citizens Energy), that's probably a wise thing to do."

The source of the oil has stirred controversy in the past in other states now accepting the help.

Some Alaskan communities refused to participate in the discount program in 2006 when it was run directly through Citgo, and Maine Gov. John Baldacci (D) initially said he didn't plan to accept the aid after Chavez's heated U.N. criticism of Bush. Maine and participating oil dealers now work with Citizens Energy to help disperse the oil.

Overall, federal heating assistance is dropping as needs are rising. The number of families receiving LIHEAP assistance has increased more than 25 percent over the last four years, from 4.2 million to 5.8 million, while federal funding has dropped from $2.4 billion in 2006 to $1.98 billion in both 2007 and 2008. President Bush wants to further cut LIHEAP aid to $1.7 billion , according to the budget he proposed in February, but Congress is expected to raise that amount.

With crude oil hitting a record of $112 a barrel, compared to $60 in 2005, U.S. Sens. Olympia Snowe (R-Maine) and Jack Reed (D-R.I.) appealed to oil companies to help low-income families with their heating bills in a March 31 letter to the American Petroleum Institute (API).

API rejected a similar plea in 2005, saying companies already paid high taxes. The request came as executives from the top five oil companies - ExxonMobil, BP, Shell, Chevron and ConocoPhillips - testified April 2 at a U.S. House hearing on oil prices and company profits. The companies are fighting to keep an $18 billion tax break that the House has voted to shift towards renewable energy incentives; the Senate has not acted on the legislation.

Kennedy of Citizens Energy has requested support from major oil companies for low-income households each year, but so far Citgo is the only company to respond.

Hennessey, of Southern New Hampshire Services, questions why free oil from Venezuela is politically sensitive when the United States already relies on Venezuela for much of its oil. Venezuela is the fifth largest source of U.S. oil imports, supplying more than 1.1 million barrels of oil per day, according to the Energy Information Administration.

"Less than one half of 1 percent of all the oil exported from Venezuela to the U.S. is donated to help almost 200,000 poor households make it through the cold winter months," Ashley Durmer, spokeswoman for Citizens Energy, said in an interview. "If there's something wrong with the poor getting a tiny fraction of the 500 million barrels of oil imported from Venezuela , then a consistent standard ought to be applied to the other 99.5 percent of the Venezuelan oil that is bought and used each day in this country."

While New Hampshire does not officially participate in the program, some of its residents who are aware of Citizens Energy, qualify for LIHEAP funding and live near participating oil distributors were able to benefit this winter, said Amy Ignatius, director of the New Hampshire Office of Energy and Planning . The oil dealers in New Hampshire that distributed the free oil through Citizens Energy participate through neighboring states.

Alaska, Connecticut, Delaware, Indiana, Maine, Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and Wisconsin, plus Washington, D.C., and Indian tribes in 7 other states participated in this winter's Citizens Energy program.