Venezuelan Heating Aid to U.S. Poor Restored

The Venezuelan government has had a change of heart: just two days after announcing that it would end a controversial program to provide free home heating oil to low-income Americans, it decided to continue with the aid.

That's good news for the 200,000 households in 23 states that got free fuel but the suspension of the program -- if only for two days -- signals to some a decline in power by Venezuelan President Hugo Chavez.

"He's just running out of money," said Mark Falcoff, a Latin America expert at the American Enterprise Institute, a conservative Washington think tank. "He needs that money to buy friends in Latin America as part of his attempt to expand his influence. But as we Americans know better than anybody, you can't really buy friends, you can only rent them."

Chavez and the leaders of other oil-producing nations are facing a quick and steep drop in the price of crude that they rely upon to keep their economies running.

The free oil from Citgo -- the American arm of the Venezuelan oil company -- is distributed through Citizens Energy, a nonprofit run by Joe Kennedy, son of late Sen. Robert F. Kennedy.

Kennedy said in a statement late today that he is "personally aware of President Chavez's genuine concern for the most vulnerable, regardless of where they may live."

"This decision is a clear, direct message from President Chávez of his desire to strengthen relations between his country and the United States, particularly at this time, when a new U.S. administration is scheduled to be sworn-in within the next few weeks," Kennedy added.

Falling Oil Prices

In July, crude hit a record of $145.29 a barrel but as the recession has spread around the globe, the price of oil has fallen to around $40 a barrel.

Fighting in Gaza and a Russian gas pipeline shutdown have brought the price back up to nearly $50 a barrel in the last few days.

"Obviously, he's a lot more magnanimous when oil prices are at $100 a barrel than when it is at $40 a barrel," said Phil Flynn, a vice president and analyst with Alaron Trading. "Chavez's entire reign and popularity really has been built upon high oil prices and his using of the country's oil profits to further his political agenda."

Chavez has been a vocal critic of the United States and particularly President Bush, whom he called the devil in a speech at the United Nations two years ago. His donation of free heating oil was criticized by many as nothing more than a political jab at the Bush administration.

Flynn said the propaganda line from Chavez was: "We're giving away free oil to the poor people. Why aren't the people in America doing the same thing? See what a great guy I am. See what a lousy guy George Bush is."

Russia's Desperation

Oil-producing countries, such as Russia and Venezuela, are "extremely desperate" to prop up the price of oil, Flynn said.

Russia recently cut off a key natural gas pipeline to Ukraine, which is also affecting the supply to Bulgaria, Turkey, Greece and Macedonia.

"This conflict between the Ukraine and Russia is because prices are low. In the past, when Russia cut off supplies to the Ukraine, it was more politically motivated," Flynn said. "But I don't think that's what it's about this time. Russia is cutting off supplies because they want to create a crisis because they need the money."

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