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7-Eleven dropping Venezuela-backed Citgo By DAVID KOENIG, AP Business
Writer
[url]http://news.yahoo.com/s/ap/20060927/ap_on_bi_ge/7_eleven_citgo_3[/url]
7-Eleven Inc. is dropping Venezuela-backed Citgo as its gasoline
supplier after more than 20 years as part of a previously announced
plan by the convenience store operator to launch its own brand of fuel.
7-Eleven officials said Wednesday that the company's decision was
partly motivated by politics.
Citgo Petroleum Corp. is a Houston-based subsidiary of Venezuela's
state-run oil company and 7-Eleven is worried that anti-American
comments made by Venezuelan President Hugo Chavez might prompt
motorists to fill-up elsewhere.
Chavez has called President George W. Bush the devil and an alcoholic.
The U.S. government has warned that Chavez is a destabilizing force in
Latin America.
"Regardless of politics, we sympathize with many Americans' concern
over derogatory comments about our country and its leadership recently
made by Venezuela's president," said 7-Eleven spokeswoman Margaret
Chabris.
"Certainly Chavez's position and statements over the past year or so
didn't tempt us to stay with Citgo," she added.
Instead, 7-Eleven, which sells gasoline at 2,100 of its 5,300 U.S.
stores, will now purchase fuel from several distributors, including
Tower Energy Group of Torrance, Calif., Sinclair Oil of Salt Lake City,
and Houston-based Frontier Oil Corp.
Chabris said 7-Eleven's decision to sell its own brand was based on
many factors, including Citgo's decision this summer to stop supplying
stations in parts of Texas and other states to focus on retailers
closer to its refineries in Corpus Christi, Lake Charles, La., and
Lemont, Ill.
But 7-Eleven had been considering creating its own brand of fuel since
at least early last year, and some analysts suggested 7-Eleven may now
be hyping the political angle a way to curry favor with U.S. consumers.
"This has nothing to do with Chavez," said Oil Price Information
Service director Tom Kloza. "They (7-Eleven) just didn't want to be
tied to one supplier."
Kloza said all 7-Eleven did was seek out suppliers who could sell it
the cheapest fuel and "that was not Citgo."
Citgo spokesman Fernando Garay declined to comment on whether Chavez's
comments had a bearing on 7-Eleven's change in suppliers. He said the
break was "a mutual agreement of the two companies."
Garay said 7-Eleven was a "significant" part of Citgo's retail presence
in Texas and Florida. "It was a valued relationship," he said.
In July, Citgo decided to stop distributing gasoline to 1,800
independently owned U.S. stations because it was a lackluster segment
of its business.
In order to meet service contracts at 13,100 Citgo-branded stations
across the U.S., Citgo had to purchase 130,000 barrels a day from third
parties — a less profitable business model than selling gasoline
directly from its refineries.
Citgo was founded in 1910 as the Cities Service Co., according to the
company Web site, and 7-Eleven's predecessor, The Southland Corp.,
bought Citgo from Occidental Petroleum in 1983.
7-Eleven sold half its interest in Citgo in 1986 and the remaining
stake in 1990 to Petroleos de Venezuela SA.
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