On January 4, Chicago Transit Authority president Frank Kruesi called a press conference to announce that the CTA had decided to reject Citgo's offer of a discount on fuel for its buses. Kruesi said the $15 million proposal was doomed because Citgo was offering the wrong kind of fuel. "If we accepted this proposal, we would not be able to run reliable transit service," Kruesi told reporters. "Our buses would be stranded all over the region, and we would be doubling our emissions in the buses that use it."
Problem was, apparently Kruesi was using the royal we. Though it sounded like he was speaking for the CTA, in fact neither the CTA board nor its chair, Carole Brown, knew that he'd been entertaining an offer from Citgo for several weeks. "The board found out about the details of the offer by reading them in the newspaper, like everyone else," says CTA board secretary Greg Longhini.
The offer was part of a recent effort by Venezuela to share a fraction of its oil wealth with the poor in the United States. Putting aside the question of whether Venezuelan president Hugo Chavez is just looking to embarrass President Bush, $15 million worth of free gasoline isn't chump change. It represents a little less than a third of the CTA's escalating annual fuel budget, and it comes at a time when the agency desperately needs all the cash it can get--the CTA is nearly bankrupt, as Kruesi repeatedly reminds riders. Most recently, it took a last-minute bailout by the state legislature and a 25-cent fare hike to avert Kruesi's proposed layoffs and service cuts. Even with the extra millions supplied by the state, it's only a matter of time before the CTA faces another budget crisis, in part because of skyrocketing gas prices. A multimillion-dollar offer probably should have been considered by its policy makers.
"Frank reversed everything," says Jacqueline Leavy, executive director of the Neighborhood Capital Budget Group, a watchdog organization. "By law, the board members are the decision makers at the CTA. Frank Kruesi works for them--he's paid staff--not the other way around. If the board doesn't know about the offer, they can't realistically put their budget together."
Citgo initially extended the offer in mid-October as part of informal discussions with 26th Ward alderman Billy Ocasio and Congressman Luis Gutierrez. "They said they were making record profits because of the spike in gas prices after Hurricane Katrina and they wanted to give something back," says Gutierrez. "In New England and New York they were offering heating fuel. That wouldn't work here because we use a different type of heating fuel. Billy and I thought about gasoline for buses. It made sense because the CTA was talking about going broke."
Ocasio says he called Kruesi and invited him to a meeting in late October with representatives from Venezuela and Citgo. "Frank said, 'I'm willing to listen to a proposal, but I will feel very uncomfortable sitting at a table with someone from the Venezuelan government,'" says Ocasio. "Frank didn't come to the meeting--no one from the CTA attended, which was a little surprising since the offer was for them."
At that meeting--attended by Ocasio, 19th Ward alderman Virginia Rugai (chair of the City Council's energy committee), and a representative of the city's Department of Environment--Citgo officials got a little more specific, says Gutierrez. "They said they would give us up to $15 million in savings by selling us fuel at 60 cents on the dollar--a 40 percent reduction--on 7.2 million gallons of diesel fuel for buses."
In early November, Ocasio says, he called Kruesi again. "I invited him to another meeting, on November 4, to discuss the offer," says Ocasio. "This time he came."
Citgo and Venezuelan officials did not attend this meeting. "I met with Frank and Alderman Rugai and the commissioner of the environment and I laid out the offer," says Ocasio. "Frank said, 'That's a very generous offer, but I don't want to get involved in foreign policy.'"
According to Ocasio, Kruesi felt that if the CTA took Venezuela's money, it would anger congressional Republicans and Bush administration officials, who might retaliate by cutting Chicago's federal transportation funds. "He said, 'I don't want to take the risk of accepting $15 million here and losing $30 million from the feds,'" says Ocasio. "He was very definitive about it, very certain." But Ocasio researched the matter and discovered that the Bush administration had not opposed Citgo's offers in other cities. "Citgo is an American company," State Department spokesman Adam Ereli told reporters at a December 8 press briefing. "They're helping Americans in need. That is a good thing. That is as it should be." (Actually, though the company's still based in Houston, Citgo's been owned by Venezuela since 1990.)
When a reporter asked if the administration "objects to various politicians at local and state levels making their own deals for such discounted oil," Ereli responded, "Local politicians do what local politicians do--they help their constituents. . . . We don't see this as a political issue. We don't see this as an issue that concerns the U.S. and Venezuela. We see this as an issue of an American company helping American people, which is good and right and proper."
Ocasio says he sent Kruesi a copy of Ereli's statement, then followed up with a phone call. "I said, 'Frank, everyone's getting stuff--New York, Maine, Massachusetts,'" says Ocasio. "He said, 'I've been on the Internet, and it's only being done with community organizations, not governmental entities.' I told him, 'No, San Francisco's making a request.' He said, 'But their fuel is dirty fuel. It burns too much emissions.' I said, 'But we don't have to use that kind of fuel. Citgo said they're willing to make a swap--trade their fuel for the kind you use.' But I never heard from him, and I began to think he's just looking for reasons to turn Citgo down."
By now it was the end of December, and Ocasio and Gutierrez had to get back to Citgo with some sort of response. "I don't want to start a new year with a fight," says Gutierrez. "But we got $15 million on the table for a transit company that's raising fares and Kruesi's saying no? We got to fight."
So they asked state reps and aldermen to attend a press conference, demanding that the CTA at least meet with Citgo. It wasn't hard finding politicians willing to attend. "I like Frank all right," says Gutierrez, "but Frank can be--oh, how do I say this without getting into even more of a fight?--sort of arrogant to people."
On January 4 they held their press conference, with white, black, and Hispanic politicians coming in from all over the city to take a few swipes at Kruesi. "I can assure CTA management that they will not be well received in Springfield as we prepare the 2007 budget," said north-side state rep Larry McKeon. "When you come with your hat in your hand, there better be a check for $15 million in it," added south-side state rep Marlow Colvin.
A few hours later Kruesi called his own press conference, echoing the dirty-gas argument he had earlier made to Ocasio. "When I heard him talking about dirty fuel, spewing emissions, I thought, 'Cute, Frank's now an environmentalist--he's playing the environmental card,'" says Gutierrez. "But the thing is, Billy had already told him that Citgo was willing to swap fuel."
After news of the dueling press conferences broke, a new character entered the fray--CTA board chair Carole Brown. "I was intrigued to learn from media reports about your interest in helping to reduce the impact of high fuel costs on CTA customers," Brown wrote in a January 5 letter to Venezuela's consul general here. "As you know, the dramatic increase in fuel prices has exacerbated CTA's structural funding shortfall. In 2006 CTA was forced to budget $48 million for fuel purchases, compared with just $12.5 million in 1999. I would be interested in learning more about your thoughts on ways to help ease the burden these higher costs place on the CTA and its customers. I look forward to hearing from you."
Gutierrez and Ocasio say they were surprised to read Brown's letter. "Could this be possible?" says Gutierrez. "Did the president of the board really learn about the offer by reading the papers? Did Frank keep the board in the dark?"
The answer is yes: Kruesi never told Brown or the other board members about the offer, much less his meeting and phone calls with Ocasio. "The first Carole ever heard of [Citgo's offer] was when she ran into [22nd Ward alderman Ricardo Munoz] in her gym sometime in November," says Longhini. "Munoz didn't have any details, just the vague idea. Then the matter came up at an internal meeting with staffers on December 9. Again, there were no details offered--it was mentioned in passing at a meeting dealing with other matters. After that she didn't hear about it until she saw it in the newspapers."
The blindsiding illustrates the reality of sitting on a public board. By law, board members are supposed to make policy. In real life the Daley administration expects them to keep a low profile and do what they're told.
"I guess Frank decided that he's the man--he doesn't have to tell the board anything, not even about a $15 million gift," says one CTA insider. "The board was really pissed. We'd like to look as though we know what's going on around here. The fact is, this doesn't make our jobs any easier. We need money, and now we have state reps like Larry McKeon saying, 'Don't bother coming to Springfield.'"
There may yet be a happy ending. After Brown wrote her letter to the consul, Kruesi started singing a different tune. On January 6 he attended a meeting arranged by Ocasio with Citgo and Venezuelan officials. Afterward he told reporters he thought the CTA might be able to work out a deal.
Citgo officials say they're meeting with the CTA to iron out logistical problems. "There's a lot of details aside from the gas swap," says another board insider. "We have to make sure that the feds sign off, and we have to see that it doesn't affect our funding from the Regional Transit Authority. Of course, we have to figure out how to make the $15 million translate into lower fares for low-income riders. None of these are insurmountable, but I wish we had the full agency working on this back in October, when it was first offered."
Gutierrez says he's learned a lesson. "We went to Frank with the offer because we figured, you know, he's the guy who runs the day-to-day, he gets things done--the executive would consult with the board," he says. "We never thought he wouldn't tell anyone about the offer. In the future, we'll just call Carole."
Art accompanying story in printed newspaper (not available in this archive): illustration/Laura Park.