7/11 to sever ties with Citgo

[capitalcity]

7-Eleven dropping Venezuela-backed Citgo

FWSTDALLAS -- 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 spokesman 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 be hyping the political angle somewhat as 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 officials did not immediately return calls for comment.

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.

[George Gervin]

Originally Posted by capitalcity

7-Eleven dropping Venezuela-backed Citgo

FWSTDALLAS -- 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 spokesman 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 be hyping the political angle somewhat as 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 officials did not immediately return calls for comment.

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.

"That'll show em.."

[mcsluggo]

Venezuela's CItgo holdings are likely the ONLY constraint that functions to keep Chavez somewhat in line. the Citgo refineries in the US are amongst the only ones in the world that can handle Venezuelan heavy crude (most of the oil from venzla is like tar, and requires significantly more refining, something that requires quite a bit more technical expertise to be done efficiently than the average refinery).

As it stands right now, If chavez moved in on foreign firms in Vnzula, he wouold stand to take a huge immediate hit if citgo assets were punatively frozen/seized, and an even more severe medium/long run hit if the heavy crude stopped flowing to those refineries. As a result he has undertaken significant levels of "creeping expropriation" (increased taxes, forced sales, questionable regulatory activity) but has stopped short of the downright nationalization that was prevelant in the 50s-70s.

Its good to have an axe to hold over that loon's head.

[mcsluggo]

furthermore, since he purged PDVSA of a huge portion of its leadership and most skilled workers after/during the strike two years ago, the vzuela oil industry is in even GREATER need of foreign expertise (both local plants and abroad refineries) than it was when Chavez took over.

he knows this.

[Mavdog]

it's pretty entertaining to watch the bush/chavez war of words, of course the entertainment will stop if the war of words escalates into actual deeds.
----------------------------------------------------------------------
Venezuela's Oil Giveaway
Hugo Chavez is helping the U.S. poor with discounted heating oil—while irritating his foes in Washington
By TIM PADGETT/MIAMI
When you're a U.S. Congressman and 25,000 constituent families can't find affordable heating oil this winter, you tend not to care where help comes from. That's at least how U.S. Representative Chaka Fattah of Philadelphia felt last week when Citgo — the U.S.-based company owned by the government of Venezuela's left-wing President Hugo Chavez — delivered 5 million gallons of heating oil at a 40% discount to low-income Philadelphia residents. Fattah says he doesn't understand the objections of many congressional conservatives who feel U.S. cities should not be helping improve the image of Chavez, one of President Bush's most strident critics. "The U.S. buys 1.5 million barrels of oil from Venezuela each day at full price," says Fattah, "so why would anyone complain about getting some at almost half price?"

That's a question the Bush Administration — whose feelings for Chavez are certainly mutual — has struggled to answer ever since Venezuela initiated the Citgo program last November. While the heating oil gesture has certainly allowed Chavez to tweak Bush's nose, it is also being recognized inside and outside of Washington as a public relations coup for Chavez's Bolivarian Revolution (named for South America's 19th-century independence hero, Simon Bolivar).

As a result, it's growing well beyond its original scope: Philadelphia, Boston, the Bronx and cities in Maine, Vermont and Rhode Island have received a total of 45 million gallons of the subsidized Citgo fuel, and other cities are slated for another 5 million soon. That's a small percentage of the heating oil Venezuela exports to the U.S. each year, but Citgo says it has set aside about 10% of its refined petroleum products for the program. Says Larry Birns, director of the Council on Hemispheric Affairs in Washington, D.C., "Unfortunately for the Bush Administration, Chavez is proving to be a more inventive thinker in terms of hemispheric politics."

It's also good business thinking, says Venezuela's Ambassador to the U.S., Bernardo Alvarez, one of the program's architects. When 13 U.S. Senators sent a letter to major U.S. oil companies last fall seeking heating fuel aid for lower-income residents in northern states, Citgo — a subsidiary of the state-owned Petroleos de Venezuela (PDVSA) — was the only one to step forward. "The U.S. is our biggest [oil export] customer," says Alvarez. "PDVSA is simply responding to that client the way any company should."

Critics suggest Chavez's oil diplomacy is simply a ploy to take consumers' minds off of record high oil prices, which are partly a result of his efforts to rebuild the power of OPEC, of which Venezuela is a founding member. Alvarez insists crude prices in the 1990s were "unfairly low" for producers like Venezuela — but says the Citgo program does give Chavez a chance to showcase "one of our revolution's most important principles: the redistribution of oil revenues, especially for the poor." He adds it also reflects "the kind of cooperation mechanism we're using with our neighbor countries in Latin America." Many of them — especially Cuba, whose communist leader Fidel Castro is one of Chavez's closest allies — get cheaper access to Venezuelan crude as part of Chavez?s campaign to forge greater Latin American integration and less economic reliance on the U.S. Last Friday, in a move that further irritated the U.S., Chavez was awarded the United Nations' Jose Marti prize for promoting Latin American unity.

But the heating oil project's biggest diplomatic coup, Alvarez concedes, may be the good will it generates among Americans at a time of deteriorating U.S.-Venezuela relations — strained ever since the Bush Administration was widely accused of backing a failed 2002 coup against Chavez (a charge it denies). Chavez, who has been democratically elected twice and is almost certain to win reelection this year, is convinced the U.S. is out to assassinate him or invade Venezuela for its oil; the White House, concerned about a growing wave of leftist victories in Latin American presidential elections, insists Chavez is a would-be dictator sowing instability in the region. Last week, as U.S. Secretary of Defense Donald Rumsfeld even likened Chavez's rise to Hitler's in the 1930s, Venezuela accused a U.S. naval attache of spying and expelled him from the country; a few days later the U.S. expelled Alvarez's chief of staff.

Amidst those tensions, says Alvarez, the Citgo program is proof that Chavez?s revolution is still fond of Americans, if not their government. (Citgo, Chavez aides point out, is also a NASCAR sponsor.) "We'll continue to support a people whose government is hostile to us," says Alvarez. "We have nothing against this country." Venezuelans and Americans might feel that way, but for the moment it seems that no amount of heating oil, no matter how deeply discounted, could thaw the enmity between their two governments.

[MavsX]

Originally Posted by mcsluggo

Venezuela's CItgo holdings are likely the ONLY constraint that functions to keep Chavez somewhat in line. the Citgo refineries in the US are amongst the only ones in the world that can handle Venezuelan heavy crude (most of the oil from venzla is like tar, and requires significantly more refining, something that requires quite a bit more technical expertise to be done efficiently than the average refinery).

As it stands right now, If chavez moved in on foreign firms in Vnzula, he wouold stand to take a huge immediate hit if citgo assets were punatively frozen/seized, and an even more severe medium/long run hit if the heavy crude stopped flowing to those refineries. As a result he has undertaken significant levels of "creeping expropriation" (increased taxes, forced sales, questionable regulatory activity) but has stopped short of the downright nationalization that was prevelant in the 50s-70s.

Its good to have an axe to hold over that loon's head.

thank you professor

[capitalcity]

Originally Posted by MavsX

thank you professor

Shhh, men are talking.