Brand Brouhaha

Illinois suburb won't let new station fly CITGO flag

BOLINGBROOK, Ill. -- CITGO continues to be a controversial brand, especially in Illinois. A day after a lawsuit against CITGO Petroleum Corp. was announced by Rockford, Ill.-based Road Ranger, a local newspaper reported that the oil company has been shut out of a Chicago suburb. When owners of a proposed gas station applied for a permit in Bolingbrook, Ill., village officials approved it, said The Naperville Sun. But they drew the line at CITGO gasoline.

Because of CITGO's ownership by Petroleos de Venezuela SA, Venezuela's state-owned oil company, Bolingbrook would not allow the company's [image-nocss] gasoline to be sold there, Jim Boan, Bolingbrook's attorney, told the Sun. At issue are anti-American comments made by Venezuela's president, Hugo Chavez, before the United Nations in September 2005. (Click here for details.)

And earlier this month, as he has done on several occasions, Chavez threatened to cut off the flow of oil to the United States. (Click here for details.)The developer of the station will not be allowed to use CITGO, but can instead brand with "Speedway, Marathon, Shell, BP or any other pro-American gasoline provider," Boan said.

The station developer, Dmyterko & Wright Partners, concurred with the decision, which was written into the special-use permit and approved by the Village Board, said the report.

Besides prohibiting CITGO, the sale of alcohol and diesel fuel is also prohibited under the agreement, added the report. Air pumps are to be provided free of charge, the special-use permit stipulates.

Also approved for the 4.32-acre site were three retail buildings and a 2,957-square-foot convenience store, as long as it is not a 7-Eleven. Boan told the paper that the stores are not welcome in Bolingbrook because of the brand's affiliation with CITGO.

But Dallas-based 7-Eleven Inc. disputes that, saying its 20-year contract with CITGO has ended. According to 7-Eleven community relations manager Nancy Lear, the company had a 20-year supply agreement with CITGO that expired in 2006. The company then made the switch to its own branded gasoline. Distributors for the gasoline, which 7-Eleven stores began selling Oct. 1, 2006, are Tower Energy Group, Torrance, Calif.; Sinclair Oil, Salt Lake City; and Frontier Oil, Houston.

The CITGO logo was removed from the gas canopies and off of the gasoline dispensers, and the 7-Eleven brand went up at 7-Eleven's 2,100 company-operated and franchised locations that sell gasoline, Lear told the paper. The move was completed by the end of 2007.

The change only affects the stores operated and franchised by 7-Eleven Inc., she said. There are about 415 other 7-Eleven stores in the United States that are licensed by independent companies, which may still have their own contracts with CITGO for gasoline, she said.

The company's decision to sell its own branded gasoline was in the works since 2005, Lear added. She said the decision was made for business and not political reasons.

Fernando J. Garay, a spokesperson for Houston-based CITGO, told CSP Daily News that Bolingbrook is discriminating against the company. He said that "all of the approximately 8,000 CITGO branded service stations scattered throughout the United States are independently owned and operated. CITGO has approximately 4,000 employees in this country, including the 571 Americans that work at CITGO 's Lemont refinery. Ten of them live with their families in Bolingbrook."

He added that "through our network of independently owned retail locations, CITGO is part of a community of 75,000 people who work hard every day to help their neighbors get where they want to go. Many of these dealers selected CITGO because of the fact that our crude oil supply comes from our own hemisphere and that is precisely one of our key strengths."

Garay noted that CITGO is incorporated in the United States; therefore, it is a U.S. company, and it is "extremely proud of a heritage that goes back nearly a century."

He concluded, "Venezuela has been a reliable supplier of crude oil and refined products to the U.S. market throughout the years and Venezuelan crude oil and products are sold to several major oil companies. CITGO 's policy includes maintaining and strengthening our relationship with our customers, in order to ensure that we continue to provide quality energy products that benefit the U.S. consumer. This is in alignment with the global energy policy of our parent company."

Click here
to view CSP Daily News' coverage of Ranger Enterprise Inc.'s litigation against CITGO, which includes CITGO's response to the suit.

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