7-Eleven Replaces CITGO as Fuel Supplier

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7-Eleven Replaces CITGO as Fuel Supplier

DALLAS -- In accordance with plans announced earlier this year, 7-Eleven next week will switch fuel suppliers from Venezuelan-owned CITGO to Tower Energy Group, Sinclair Oil and Frontier Oil Corp., reported The Associated Press.

More than 2,000 locations will begin to sell "7-Eleven" fuel from the one of the three new suppliers next week. A spokeswoman for the retailer told the AP that 7-Eleven's 20-year contract with the oil company was due to end next week anyway, but the behavior of Venezuela's president, Hugo Chavez, had become a public relations issue for 7-Eleven even before his highly-publicized attacks on U.S. President George W. Bush last week.

CITGO is a Houston-based subsidiary of Venezuela's state-owned oil company.

During a UN meeting last week, Chavez hinted that that Bush was the devil and, in the past, has called him an alcoholic. The U.S. government has called Chavez a destabilizing force in Latin America.

7-Eleven spokeswoman Margaret Chabris told the AP, "Regardless of politics, we sympathize with many Americans' concern over derogatory comments about our country and its leadership recently made by Venezuela's president Hugo Chavez."

She added, "Certainly Chavez's position and statements over the past year or so didn't tempt us to stay with Citgo."

She added that a boycott of CITGO gasoline would hurt nearly 4,000 employees of the CITGO subsidiary who have no connection to Venezuela.

However, it would be unfair to view Chavez's statements as the cause of the break-up of 7-Eleven’s contract with CITGO, said industry analysts, who noted that the retailer didn't want to be tied to a single fuel supplier and wanted to deal with several lower-priced sources.

The convenience chain's former CEO Jim Keyes told shareholders in April that the retailer was considering going unbranded. 7-Eleven originally announced plans to switch oil suppliers in August when CITGO announced that it would cut 14 percent of its 13,000 service-station network across 10 states.

Since 7-Eleven stores will not fly a major oil company's banner, franchisees hope that the change to unbranded fuel will enable them to be more price competitive in today's volatile gasoline market, said Tariq Khan, president of the National Coalition of Associations of 7-Eleven Franchisees. "We want to pass that savings onto the consumer," he told CSNews Online in August.

Tower Energy Group, based in Torrance, Calif., currently supplies 25,000 barrels a day to nearly 800 7-Eleven stores -- both company-owned and franchised -- according to Tim Rogers, Tower's president and CEO. With the end of CITGO's contract, Tower's supply will increase by 95,000 barrels a day, CSNews Online reported in August.

"The agreement is very similar to what CITGO is supplying them. But rather than sell the CITGO brand, it will be the 7-Eleven brand, which is as strong a brand as any other," Rogers told CSNews Online.