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Put Your Money Where Your Mouth Is

In the last edition of Kicking Asphalt, we introduced a new section entitled ''Put Your Money Where Your Mouth Is''. This section is inspired by the perception that the ''conscious consumer'' once stereotyped as a Birkenstock wearing member of the fringe, is now mainstream. A Yankelovich poll concluded that there were nearly 10 million committed environmentalists--and another 60 million ''interested'' ones. A Roper poll came to a similar conclusion. And that's just selecting one of our social values. Yet we are unaware of our numbers--or our Buying Power.

Voting every two years is not enough. We need to vote with our dollars every day. But consumers need Information to make this easy. Better World will start by providing information as a regular feature of Kicking Asphalt that enables us to ''put our money where our mouths are''.

This month, we want to share two sets of communications with you. Last month, we introduced this column by highlighting the effort to persuade consumers to purchase from CITGO, the Venezuelan owned oil company, rather than oil companies that depend upon Mideast Oil. We were also careful to point out that the Venezuelan government of Hugo Chavez is controversial, so you should make you own judgments as to your comfort at supporting his regime.

This article was shared by more of you than any article in Kicking Asphalt's history. One of the responders was a member who has worked in the oil industry. We're printing our exchange for two reasons. First, he adds another perspective to the Citgo ''buycott''. Second, to be a conscious consumer requires substantial information and judgment. Better World understands this and will work to be as trustworthy a distributor of information as possible.

May 20, 2005

Give me a break. Citco?? They import 10% of their crude from the Middle East. If you want a lower user, try Mobil or BP or Conoco. The last time I worked for a petroleum refinery they had about 8 sources for crude. This is the type of nonsense you would expect from some third rate political rag. If you want to be rid of petroleum just use it all
up. And that is happening at a rapid rate. Unfortunately there is more to crude than gasoline.

... I hate AAA, but keep this up and I will be going back, or maybe I do not need towing insurance or biking insurance anyway.

Samuel Burkeen
Reston, VA

May 20, 2005

Gee Samuel-

It hurts to be called a 3rd rate political rag. But we just don't make this stuff up. So I guess we'll just have to compare sources. Here are ours:

DOE: In 2004, BP imported over 22% from the Persian Gulf. CITGO less than 4%. In March, CITGO didn't import any Middle Eastern Oil. The same can't be said for BP. I've attached the spreadsheet.

That's not to say that there aren't other facts out there. Or perhaps we've misinterpreted something. Let me know what you're seeing.

But we are going to keep it up. As you know from reading this article,we want people to make up their own minds. But we are going to try to give our members information that we believe most of them would find relevant to their mobility. However, we're happy to publish opposing views from our
members. So if you want to write something for Kicking Asphalt, I'd be happy to include it.

Mitch

Mitch Rofsky
President
Better World Club

May 20, 2005

...At the rate Chaves is going Citgo may be getting all of its crude from the Middle East in the near future. He fired 18,000 workers from PdVSA in 2003. Analysts from Goldman Sach's Emerging Markets Economic Research put production at 500,000 to 600,000 b/d below what the government is advertising.

Samuel Burkeen
Reston, VA

May 20, 2005

I just finished reading CITGO's 10K filed with the SEC. I was right about being a 3rd rate political rag; you might make that a 4th or 5th rate rag. CITGO has five refineries under it's corporate structure. CITGO only purchases 50% of its crude from PDVSA. Additionally, it's refineries cannot meet the demand from its retail outlets so it purchases gasoline and diesel from other suppliers.

Here is quote right out of the 10-K,

Thus, CITGO purchases and sells refined products of various grades in various locations from other suppliers. Sales of refined products are reported as revenue upon transfer of title to the buyer. Purchases of refined product are treated as acquisitions, a component of cost of sales, upon
transfer of title to CITGO.

So where does the gas come from when you fill up at CITGO? Who knows? In fact, where does the money go? Depending on market conditions, contracts retail demand, etc. it is very unpredictable.

At any rate, any generalizations about mideast crude related to the products you buy whether it is plastic based from Home Depot, gasoline, heating oil, or drugs, is total BS.

You seem to be competing with AAA for the phony baloney award. Maybe it is time for me to just self insure for road service.

Samuel Burkeen
Reston, VA

May 20, 2005

Samuel-

If I'm reading this right, you were using 2002 figures, while we're using 2004/5 figures. Let me know if I don't have this right.

Yeah, I saw something in the Wall Street Journal today on the fact that Chevez may be overstating his output. And I hope you don't take our newsletter as indicating that we favor CITGO exclusively among all others. We just want our members to know what's going on. In fact, BP is
considered the most ''environmental'' of the oil companies, as you may already know.

Again, if you are interested in contributing to Kicking Asphalt, let me know.

Mitch

May 20, 2005

You have it right I used 2002 figures. However, if you expect me to generalize based on one years worth of data, and publish some article intimating some long term moral high ground with respect to CITGO gas it won't happen. Using one year's worth of data is what I would expect from someone pushing a political agenda. However, you need to go read
the 10-K filed with the SEC. That seems to get down to reality, which is what I suspected all along. You basically cannot tell where the gas is coming from when you pull up to the pump at CITGO, and you cannot tell where all the money goes.

Samuel Burkeen
Reston, VA

May 21, 2005

Citgo's $5 billion plus worth in today's market. He wants to stop sending Venezuelan oil to the U.S. (to Citgo), and he wants to prevent the possibility of the U.S. freezing Citgo's assets (after some foolhardy action on his part.) It appears that Hugo Chavez is considering the sale of Citgo to foreign buyers, i.e., the Russians (Lukoil), Brazilians (Petrobras), or Arabs, with the Chinese now excluded by the U.S. Homeland Security Department. Presently, there appear to be two U.S. independent refiners, Valero Energy (CEO Bill Greehey), and Premcor Inc. (formerly Clark USA) that are interested in
one or two of Citgo's refineries.

As the buycott proceeds perhaps the participants can take heart in the fact that the new buyer may be Saudia Arabia. They can finance the Saudi family's trips to the Riviera. Apparently, Chavez considers every drop of crude going to CITGO is just lining Bush's pockets, and he would
like to drop CITGO like a hot potato. Besides he needs the money to buy MIGS, and I bet Lukoil is interested - Putin needs to go to the Riviera too. Maybe you should include some of these ancillary facts on your website for those who want to fill up at CITGO, thinking they are buying hospital bed pans in Venezuela.

Better World - More BS for a better world.

Samuel Burkeen
Reston, VA

May 22, 2005

Gee Samuel, you're awfully tough. After all, I have offered you the opportunity to write something for our Newsletter on this. However, I'm now at the point where if you don't want to write something, I'm going to write a follow-up.

As you should know, our intention is not to do first party research on these issues. It's to report on those things that we observe in the marketplace. I can understand the perception that Chavez might want to sell CITGO. Putting aside the issue of whether buying CITGO gasoline is
preferable-as we pointed out in our article, we can't say that the money is going where Jeff Cohen says its going--one of the challenging aspects of being a consumer interested in ''socially responsible'' business is the issue of
successorship. Many people felt as unhappy about Ben & Jerry's selling to Unilever as they would if they sought out CITGO gasoline and it was then sold to Saudi Arabia. Should companies never be supported because one day they may be
sold to another company? Should consumers speak out that they won't buy the product if the company is sold to someone of whom they don't approve? It's a very difficult subject. (And, I want to be explicit to prevent any misunderstanding, I am not saying CITGO is socially responsible.)

Anyway, I'm forwarding your comments to Jeff Cohen for his response.

Mitch

May 22, 2005

Mitch--

I'm on the road in speaking tour about media, so a bit rushed. I encouraged buying Citgo gas to get some more dollars to Venezuela's innovative social uplift programs, some of the most dramatic in our hemisphere and the planet. That's all. It wasn't a plan to shut off all dollars to mideast or saudi oil. I've seen the US Dept of Energy estimate that Citgo gets 4% of its crude from mideast. The overwhelming majority of its crude reportedly comes from Venezuela and Mexico. Is Chavez a perfect leader? No. Might the reform/revolutionary process in Ven go corrupt, repressive, corrupt. Many have gone bad in other places, other times. But at this moment in time, it seems like an easy way for US consumers to show a preference for the poor in a country with so many poor amid so much oil wealth.

I've gotten a few emails suggesting that Chavez and Bush have much in common in terms of how they deal with media, the courts, the opposition. Some of these comparisons seem overwrought. No one has objected to my characteriztion that Chavez and Bush are fundamentally
opposite on the issue of who government should serve -- those who are already well-off or those who need a helping hand. Indeed, it seems that critics of the column do their best to avoid that central point.

Jeff Cohen

ps. I have seen interviews and reports about Chavez and PdVSA (the Ven national oil company) considering a sale of Citgo or parts of Citgo --including a recent interview with the new PdVSA hea seeming to pooh-pooh the likelihood of any sale in the near future.

May 23, 2005

Well, I see you seem to be avoiding the facts stated in the 10-K. After all, it has the force of law behind it. As I understand, the goal here was to provide funds for health care in Venezuela by purchasing gasoline from CITGO. Given the fact that 50% of the crude used by CITGO comes from PDVSA, and 58% (cited in 10-K) of the gasoline sold by CITGO in 2004 came from other wholesale suppliers what might be the relationship to healthcare? I have no idea how much the Venezuelan government spends on healthcare, but for the sake of doing an estimate let's assume 10%. So what is the probability of a link to healthcare in Venezuela when you make a purchase? It looks like, .5x(1-.58)x.1 = .02. So, let's see, when you make the purchase there is a 2% probability that some part of that purchase could be associated with healthcare in Venezuela. In fact, if the whole government budget was spent on healthcare there is
only a 20% probability. This is misleading in the extreme, and you have added credibility to it. And, I am done with this. Although, I am glad you motivated me to wade through CITGO's 10-K. It gave me a better appreciation for the risks and complexity of the oil business.

Samuel Burkeen
Reston, VA