Trump’s Looting of CITGO Punishes Low-Income People in Venezuela and US

MAPA Newsletter October 2020

by Yoav Elinevsky

The Trump administration’s deadly intent to bring down the elected government of Venezuela has been on full display in recent months, as it tightened already severe sanctions, placed a $15 million bounty on President Nicolas Maduro’s head, conducted provocative military maneuvers off the country’s coast, and provided overt and covert support for a coup attempt and an adventurist “invasion” by a small band of armed mercenaries.

These interventions are nothing new. The US government orchestrated a failed coup against Venezuela’s legitimately elected President Hugo Chavez in 2002. A major aggressive policy escalation by the US occurred in 2015 when President Barack Obama declared that Venezuela posed a national threat to the US and therefore the US could impose sanctions on the struggling Latin American country.

Trump’s more severe sanctions have led to the deaths of tens of thousands of vulnerable Venezuelans and have crippled the Venezuelan government’s ability to continue to provide food, medicine, and other services such as education and housing that had been available to every Venezuelan at no or low cost. The goal of the US is to inflict severe pain on the Venezuelan people to force them to turn against their elected government and support a political system that benefits U.S. interests and local elites.

Sanctions Hurt Low-Income Residents in US  

What is not widely recognized is that the sanctions on Venezuela are also hurting some two million low-income Americans, including tens of thousands of Massachusetts residents, who used to receive free heating oil from CITGO, a company owned by the Venezuelan government. The sanctions have disrupted that program.

US Stealing CitgoMoreover, as the US government is spending huge sums on a campaign to remove President Nicolás Maduro’s legitimate government of Venezuela, it reduced funding for the Low-Income Home Energy Assistance Program (LIHEAP), a federal program that issues over $3.5 billion in aid to around 20 million poor Americans who live at 150 percent of the poverty level and struggle to afford heating. According to Massachusetts state officials, federal funding for LIHEAP in Massachusetts dropped from $147 million to $136 million in 2019.

The headline of an article in the Boston Herald in January 2019 was “Where’s Joe Kennedy when you need him?” The newspaper reported that a group of mostly elderly, low-income people demonstrated in front of the State House to seek help to offset cuts in federal home-heating assistance. They, together with some 48,000 households in the state, had used up their benefits and were about to be without oil to heat their homes.

According to the organization Action for Boston Community Development (ABCD), even in the mild winter of 2020, “the health and safety of tens of thousands of struggling low-income elders, children, people with disabilities, and families” were at serious risk because of insufficient funding for the fuel assistance program in the state. According to the Massachusetts Association for Community Action (MASSCAP), during 2019-20, 160,000 households in the state are served by organizations that rely on federal funding for heating assistance.

“Without additional resources from the state, we are unable to help those thousands that right now don’t have money for oil delivery, and they have nowhere else to turn,” said Elizabeth Berube, Deputy Director of Citizens for Citizens. Some Massachusetts households received only $500 to $700 to pay for an entire season’s worth of heat, according to Berube. Families that cannot afford oil refills often turn to risky alternatives or make compromises that leave them unable to address other needs, she said. “Without the fuel assistance program, elderly trade medical care for heat. Families trade food for heat. Elderly and families use dangerous alternative heating approaches such as open ovens or unsafe use of space heaters,” Berube said. “The bottom line: fuel assistance saves lives.”

The History of CITGO and the Citizens Energy Corporation

From 2005 to 2016 Joe Kennedy II, through his nonprofit Citizens Energy Corporation, partnered with CITGO to assist tens of thousands of households in Massachusetts with free heating oil.

The CITGO heating-oil program was launched after Hurricane Katrina damaged US refining capacity in 2005, causing energy costs to spike as winter approached. Over the years CITGO donated more than 200 million gallons of heating oil worth more than $400 million to two million program participants in 25 states, including Massachusetts, Alaska, Connecticut, Delaware, and Indiana. The program also provided heating fuel to members of more than 240 Native American communities and reached more than 200 homeless shelters.

Massachusetts was the program’s second largest beneficiary. In 2008 the CITGO and Citizens Energy Corporation program delivered approximately 8.5 million gallons of heating oil to more than 33,000 households and around 60 homeless shelters in Massachusetts. Local oil dealers delivered 100 gallons of fuel at no cost to eligible families throughout the state.

Headquartered in Houston, Texas, CITGO Petroleum Corporation is an American private company that is owned by the National Oil Company of Venezuela. Venezuela was the only country in the world that agreed to donate heating fuel to Joe Kennedy’s Citizens Energy Corporation.

“We are so grateful for this generous donation from the people of Venezuela and CITGO Petroleum Corporation,” Kennedy said. He added that he had approached major US oil companies and oil-producing nations to ask them to assist the poor in bearing the burden of rising energy costs. “They all said no,” said Kennedy, “except for CITGO, President Chavez and the people of Venezuela.” Kennedy added, “I have asked every single oil company, and not one of them has given me a gallon to help the poor.” Recently deceased Congressman Elijah Cummings of Maryland had also stressed the importance of helping those in need: “I commend CITGO and Citizens Energy Corporation for launching the Heating Oil Program. This program is literally lifesaving for so many whose resources are already stretched thin in tough economic times. I stand with the many Baltimore and Washington recipients who thank both CITGO and Citizens for their commitment to helping our communities.”

CITGO Petroleum Corporation is a recognized leader in the refining industry with a well-known brand. CITGO operates three refineries, located in Corpus Christi, Texas; Lake Charles, La.; and Lemont, Ill. With approximately 3,400 employees and a combined crude capacity of approximately 769,000 barrels-per-day, CITGO is ranked as the fifth largest independent refiner in the United States. CITGO transports and markets transportation fuels, lubricants, petrochemicals, and other industrial products and supplies a network of approximately 4,700 locally owned and operated branded retail outlets in 30 states and the District of Columbia. It has a network of pipelines crisscrossing 23 states. It provides between 5% and 10% of US gasoline. CITGO was set up as a multi-layered structure, with a holding company (CITGO Holding Inc.) that does little besides hold the shares of CITGO Petroleum Corporation. This holding company in turn is owned by PDV Holding Inc., which is the direct US subsidiary of Petroleum de Venezuela SA, PDVSA. Venezuela has owned CITGO since the 1980s as part of PDVSA. In 1986 Venezuela bought a 50% stake in CITGO and purchased the remaining 50% in 1990. In 2018 it had a net income of $851 million, on a revenue of nearly $30 billion. CITGO, Venezuela’s largest foreign asset, once contributed over $1 billion a year in dividends to its parent company PDVSA. As of March 2020, CITGO Petroleum reported assets of about $9 billion.

US Looting of Citgo

In August 2017, the US imposed sweeping financial sanctions on Venezuela that prohibit American financial institutions from transferring money to the Venezuelan government or its state oil company, PDVSA. The new sanctions also restrict CITGO from sending dividends back to Venezuela and ban trading in two bonds the Venezuelan government recently issued to circumvent its increasing isolation from Western financial markets.

In January 2019, President Trump officially recognized Juan Guaidó as the acting president of Venezuela. A few days later Secretary of State Michael Pompeo certified the authority of Guaidó to receive and control certain property in accounts of the Government of Venezuela or the Central Bank of Venezuela held by the Federal Reserve Bank of New York or any other US-insured banks. At the end of January 2019, the Trump administration announced sanctions against PDVSA. The CITGO board of directors was prevented from entering the US and the stage was set for the US and the right wing in Venezuela to take control of CITGO. In February 2019 Guaidó appointed new boards for PDVSA, CITGO Holding Inc., and CITGO Petroleum Corporation. This thievery was made legal in July 2019 by a US court in Delaware, where CITGO was incorporated.  One of the first acts of the new CITGO board was formally to cut ties with its parent company, PDVSA. The usurpation of CITGO from the legitimate government of Venezuela was thus completed and revenues from CITGO can be used in the deadly campaign of regime change in Venezuela.