I know little about the oil sector, but I do remember watching gas prices spike after Hurricane Katrina and an influx of people to the site looking for information on how to save money on gas. That’s why I read a story at usatoday titled Has Citgo Become A Political Tool For Hugo Chávez? – from the article:
…there’s nothing ordinary about Citgo. One of the USA’s largest refiners, Citgo is a subsidiary of Venezuela’s state-owned oil company, Petroleos de Venezuela S.A. (PDVSA). As such, it ultimately belongs to Venezuelan President Hugo Chávez, an avowedly anti-American leader who counts Fidel Castro among his closest friends and mocks President Bush as a “genocidal murderer.”
The question of Chávez’s influence over Citgo was highlighted by the company’s recent provision of 25 million gallons of subsidized home-heating oil to poor people in the northeast USA. More than 100,000 households in four states should eventually benefit from the low-cost heating aid.
But some worry that Venezuela’s ownership of more than 6% of U.S. refinery capacity gives Chávez, a former paratrooper given to wearing red berets and military fatigues, the power to cripple as well as comfort.
As Hurricanes Katrina and Rita demonstrated, any disruption to the nation’s refining industry instantly increases gas prices. What if Chávez, who periodically threatens to curtail oil shipments to the USA, closed Citgo’s refineries?
“He’d only have to do that for 90 days, and he’d destroy our economy,” worries Matthew Simmons, a prominent energy investment banker. “He actually has our livelihood in his hands.”
Others note that imported oil from elsewhere eventually could compensate for any interruption in Citgo supplies. And, because Chávez depends on the company’s specialized refineries to process Venezuela’s sulfur-rich crude oil, a shutdown would cost him and his country dearly.
The entire story is well worth the read and a lot of interconnecting issues that don’t always make it clear cut whether this is a good or bad thing. How can you criticize a company that gives oil to the poor so they don’t have to choose between food and heat (while all the other oil companies balk at giving up even a bit of their huge profits). On the other hand, is it good for one person to have that much control over something that could cripple the US economy?