I’m in the Wrong Business

Update: As Maury pointed out in the comments, Chavez has reconsidered:

Venezuelan-owned Citgo Petroleum, which had earlier indicated it might end a home heating oil assistance program for low-income Americans, yesterday said it had decided to continue the program.

Joseph P. Kennedy II, chairman of Citizens Energy, said yesterday that the renewal of the program was evidence of Venezuelan President Hugo Chávez’s “genuine concern for the most vulnerable, regardless of where they may live.”

Does that mean that he was no longer concerned for those people when he cancelled the program? With comments like that, Joe Kennedy’s $400,000 salary won’t be in jeopardy.

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You may have seen the recent announcement that Hugo Chavez is cutting off the free heating oil for low income residents in the Northeast:


Citgo Stops U.S. Oil Gifts in Sign Chávez Feels Pain

Citgo Petroleum Corp., the U.S. refiner owned by the Venezuelan government, will suspend charitable contributions of home heating oil to poor U.S. households — a sign that falling oil prices may hamstring Venezuelan President Hugo Chávez, whose administration has used an oil windfall to win voters’ loyalty at home and allies abroad.

In a surprise announcement, former U.S. Rep. Joseph P. Kennedy II said Venezuela would stop deliveries to his Boston-based nonprofit, Citizens’ Energy, which last winter received $100 million of fuel that was distributed throughout the Northeast. Mr. Kennedy said Citgo cited falling oil prices and the world economic crisis for forcing the company “to re-evaluate all of its social programs.” Neither Citgo nor the Venezuelan government had any comment.

That alone is an interesting story. Chavez has siphoned money away from the oil industry in order to pay for social programs, which has resulted in underinvestment that will eventually come back to haunt him. (See this story that I wrote last year highlighting the issues). To this point, high oil prices have been a blessing for him, but falling production and low oil prices are combining to put the squeeze on Chavez.

But that isn’t the point of this essay. In a discussion on this at The Oil Drum, someone linked to a bit of additional information:


Chavez, Joe Kennedy and Oil Math

It’s hard to avoid the commercials starring former Congressman Joseph Kennedy II explaining how friendly Venezuela and Hugo Chavez are to the American people. After all Chavez and Kennedy are bringing relief to the poor people of America who suffer under the evil tyranny of high fuel costs. However, reality has a tendency to get in the way of press events for Citgo and Citizens Energy Corporation such as the scenes of Joe Kennedy driving up to house in a Citgo truck to deliver 40% cheaper heating oil from his “not-for-profit energy company.” The last thing anyone involved in this program wants is for someone to look behind the curtain.

First, Citizens Energy Corporation is not the organization that is directly involved with the program. Rather, one has to first look to a holding company, which is a for-profit and wholly owned subsidiary of Citizens Energy’s called Citizens Enterprises Corporation: first, eighty-six percent of Mr. Kennedy’s over $400,000 annual salary comes from this organization.

It’s always been a pet peeve of mine when ‘charities’ pay outrageous salaries to their employees. If I send a charity a check, I really don’t want it paying for a vacation home in France. $400,000? Are you kidding me? Poor Joe may have to take a pay cut and join so many others who have been impacted by the economic turmoil.

I have always heard that if you want to get rich, you should start your own religion. But it looks starting your own charity can also offer up a path to riches. Now, if I can just come up with a catchy name…

21 thoughts on “I’m in the Wrong Business”

  1. America’s elite, somewhere along the line, has become oblivious and completely de-coupled from the broad middle class.
    They don’t serve in wars, even wars defined as a vital battle save our civilization from pan-global terrorists (The Bush twins).
    When the elite draw $400k salaries, they think it is charity work and wages(see RR’s post on Kennedy).
    They think flying private jets to D.C. and asking for taxpayer money is okay (Big 3).
    No matter how rousing the rhetoric, they will not send their kids to public school (Obamas). I cannot think of a more important statement for Obama to make than to send his kids to public schools, but he doesn’t, and no one even expects him to.
    I have stopped hoping for real leadership in this country. The good ideas are circulating around on the Internet, on blogs such as this one.
    How do we get our good ideas implemented? I don’t know.

  2. $400K is a pretty small number compared with the compensation of many university presidents.

    The whole idea of a “non-profit organization” needs to be reassessed. What it often means in practice is that there are no shareholders you have to share the loot with.

  3. “I cannot think of a more important statement for Obama to make than to send his kids to public schools, but he doesn’t, and no one even expects him to.”

    If you had the status and money to send your kids to Sidwell Friends, would you instead send them to a public school in Washington, D.C.?

    It would be an important statement to send them to a public school, but you also have to think of their education.

    On the subject of the Bush twins, and Chelsea Clinton it would have been great had at least one of them gone into the military.

    That’s one thing the royal family in Great Britain has right ~ they have a sense of service to country.

  4. Oh come on, Rob!
    The guy is a Kennedy, which means $400,000 a year is bare minimum. He needs more than that just to be himself (the Anna Nicole argument for why she needed the billion$$ from her ex-husband’s estate).

    Think about the weight of the curse* the poor man is living with…

    *you know, the curse of stupidity that says you can fly under conditions you’re not rated for and be OK, or ski really, really fast and the trees will get out of your way, etc. etc.

  5. Wendell- I suppose this is OT for an energy blog, but yes, as prezzy of the US I would make a point of sending my kids to public schools. Especially if I were Obama.
    His kids have Secret Service protection, so safety is not an issue.
    Education? Oh please, like those girls won’t be among the most knowledgable, advantaged girls in the world. They will get in any college they so choose.
    And real learning come from within, the desire to read books, delve deeply into a topic.
    But the biggest advantage is the prezzy would learn about public schools, and his daughters would see how real people live.
    Who knows? Maybe by example, his daughters would help others.
    Not at Sidwell.

  6. Benny,

    You’re right, he should send his kids to a public school. That would have sent a bodacious message.

    And at least one of the Bush twins or Chelsea Clinton should have gone to West Point, Annapolis, or the Air Force Academy. It’s pretty much pro forma that children in the royal family in Great Britain attend Cranwell or Sandhurst.

  7. Oil tanked today hard. Evidently, there is so much oil, now there a multiple inquiries to oil tanker owners about storage.
    Oil down 12 percent in one day.
    Last year, 2008, less oil was consumed globally than in 2007 (EIA). We hit Peak Demand in 2007. Really, does anybody think the world will use more oil in 2009?
    The Mother of All Gluts is forming now.
    $10 oil here we come.

  8. DEL GALAGHER–

    the ethanol folks have plenty of financial coverage–

    1]- us congress[44 corn state sens + an equal share of us house of reps].

    2]- big FARMA/AGR lobby.

    not to worry, that big sow will be fed/clothed/warmed very well.

    fran

  9. ROBERT–

    the name– “winds of charity”

    the service–free electricity from wind farms

    where– off the coastline of HYANIS, MA.

    how–full support from “the kennedy clan” and all wealthy neighbors

    your role– create miracles.

    reward– next senator from MA. with kennedy backing, assigned as chairman of select commitee in charge of all ethanol programs for the U S of A.

    i’ll be first donor for the WINDS. please post mail address.

    fran

  10. Bash away, but your own post clarifies the matter:

    ========================
    First, Citizens Energy Corporation is not the organization that is directly involved with the program. Rather, one has to first look to a holding company, which is a for-profit and wholly owned subsidiary of Citizens Energy’s called Citizens Enterprises Corporation: first, eighty-six percent of Mr. Kennedy’s over $400,000 annual salary comes from this organization.
    ====================
    In other words, the for-profit corp is paying 86% of the $400k, or around $340k of it, not exactly Rex Tillerson coin, and presumably there have to be profits. So he’s making $60k from a charity, and $340k from a for-profit that pumps money into the charity (and, as a for-profit, presumably pays taxes etc.). What’s your beef?

  11. Walker-
    Yes, I still have a beef. What does some guy pulling down $340k still need to yank 60k from a charity?
    That’s my point–the elites are so far removed from the middle-class, they no longer understand that $340k is a huge salary.
    That all sorts of people work hard all year for much less than $100k.
    Sheesh, I know people who moonlight and make less than 100k.
    I have long thought that every Congresspersons’s salary should be exactly the median family income in the USA (adjusted a little bit for the bona fide higher costs of say, renting an additional place in D.C.).
    And all other income forbidden. Let them see what it is like to live on a middle-class income. Of course, they would refuse.
    I wonder if this financial myopia is one reason we cannot generate a sensible energy policy. The Kennedys and the millionaires in Congress wonder why $5 gasoline would stop anybody from buying.
    Answer: We are not all millionaires, and we try to live within our means.

  12. (adjusted a little bit for the bona fide higher costs of say, renting an additional place in D.C.)

    No adjustment for living in D.C. There is no reason for them to rent or buy homes in Washington ~ that just encourages them to become lobbyists.

    While in D.C. doing our business, they should have to stay in government-run dorms and eat at a mess hall.

  13. While in D.C. doing our business, they should have to stay in government-run dorms and eat at a mess hall.
    I like it! Can we make it a 50-state proposition in the next election?

    OTOH, I have heard reports that many of these guys don’t live much better…

  14. Wendall- A mess hall run by private contractor, lowest-bid etc.
    Optimist–please, don’t buy those waa-waa stories about some Congressmen sharing apartments. They get unrivalled health and pension benefits, travel allowances etc. Most lunches and dinners, they can eat free at event. The most financially strapped Congressman still lives better than the vast majority of people in his district…..

  15. MSSRS COLE. MERCANTILE, ANONYMOUS–

    reduce their allotted time in DC to five months. let them work their other lives/jobs back home[away from beltway].

    they might see a different “american” life living with others; there would be less time for their “‘normal” mischief in DC. less time to waste their energy spending our tax money.

    fran

  16. A book just came out arguing that charities need to pay more to employees and act more along the lines of for profit organizations in order to make any change. I haven’t read it yet so I can’t comment on its quality. But I am looking forward to reading it.
    http://www.amazon.com/gp/product/1584657235

    Robert, are you going to print up your list of favorite 2008 books?

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