Wednesday, September 27, 2006

7-11 tells Citgo to take a Big Gulp

7-Eleven announced this morning that it has ended its relationship with Citgo, the American subsidiary of Venezuela's state-run oil company. The convenience-store chain said that Venezuelan President Hugo Chavez's recent derogatory comments at the United Nations about President George W. Bush prompted it to drop Citgo gas at 2,100 of its 5,300 stores.

Several reports note that the move may be more business PR than a slap at Chavez -- 7-Eleven has been talking about launching its own branded gasoline line for more than a year.

Also, since Japan's Seven & I Holdings bought the chain in 2005, it hasn't actually been an "American" company -- it trades on the Tokyo Exchange, not the NYSE. So much for national pride driving the decision.

And, keep in mind that 7-Eleven -- then operating as Southland Corp. -- was the company that sold Citgo to the Venezuelans in the first place. Southland bought Citgo from Occidental in 1983, then flipped it Petroleos de Venezuela -- half in 1986, the other half in 1990.

The original Citgo company started around 1910 as Cities Service Company, a gas and electric utility in the Southwest that eventually moved into oil production. When the Public Utility Holding Company Act of 1935 (PUHCA) forced Cities to divest either its utility or its oil and gas holding, Cities picked oil.

If only PUHCA reform had come earlier: Oklahomans would still own Citgo, Hugo Chavez would be driving a cab in Caracas, and a gallon of gas might still cost less than a gallon of milk down at the 7-11.

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At 9/27/2006 7:04 PM, Blogger Bukko_in_Australia said...

Ah, but if the "reform" (Republican code word for "destruction") you mentioned had been done earlier, what excuse would the U.S. have to attack countries in the Middle East and extend its empire? Remember, "we're from the U.S. military and we're here to free (i.e. "kill") you."

At 9/27/2006 7:37 PM, Blogger Kristen Nelson said...

Hi Bukko,

Well, since Venezuela is in South America, not the Middle East -- and this is a case where an American company sold its assets to the Venezuelans -- I don't think that really applies here...

Is there some aspect of PUHCA that you have a special interest in?



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