JOHNSON CITY, N.Y. -- Seven weeks after Venezuelan president Hugo Chavez lashed out at President Bush during a United Nations speech, the CITGO signs at some convenience stores in upstate New York and Pennsylvania are disappearing.
CITGO signs are coming down at several Kwik Fill and Red Apple stores operated by Warren, Pa.-based United Refining Co. in the Binghamton, N.Y., area, according to the Associated Press.
A United Refining spokesperson told Binghamton radio station WNBF that the move is because of Chavez and what he said [image-nocss] at the UN.
Chavez' calls for a socialist revolution haven't made it easy for Houston-based CITGO Petroleum Corp. to quietly go about refining oil and selling gasoline to U.S. consumers, or steer clear of spats between Caracas and Washington, another AP report said.
As has been widely reported, Chavez's speech calling President Bush the devil has left CITGO dealing with a political backlash. Momentum has been building for a U.S. boycott of CITGO products.
Experts do not expect anti-Chavez sentiment to have a lasting impact on CITGO's bottom line, however, since gasoline consumers typically put price above principles, and face a difficult task choosing a gasoline brand that does not have political or ethical baggage.
An August 28 report from ratings agency Standard & Poor's cited by AP noted much of CITGO's free cash flow is returned to its parent company, Petroleos de Venezuela SA, through dividends. CITGO has returned nearly $1.2 billion in dividends to state-owned PDVSA since the start of 2005, according to company news releases. The S&P report also said that because CITGO doesn't own its U.S. retail stations, it does not benefit directly from convenience store and other nonfuel revenue.
In the long run, experts say CITGO is not likely to suffer significant economic harm, given the failure of past oil company boycotts such as the anti-Exxon campaign after the tanker Exxon Valdez spilled oil along Alaska's coast in 1989.
And price usually wins out over principles in the petroleum market, where oil companies have an incentive to sell as much gasoline as possible through their own branded stations, rather than through other retailers' outlets. Companies' ties with political regimes of varying stripes around the world make it difficult for consumers to buy any brand of gasoline free of anxiety about whether they are doing the right thing. Complicating it all is a many-layered global oil refining and distribution system that makes it difficult to track the product's path from below the ground to the gas tank.
Anti-CITGO politician Boston City Councilor Jerry McDermott (D) is pushing a resolution calling on Boston University to cancel a contract to rent a neon lighted sign bearing CITGO's red triangle logo atop a university-owned building, prominently seen by fans watching Red Sox games at nearby Fenway Park. McDermott's proposal hasn't yet come before the full council and is opposed by Mayor Thomas Menino.
In Florida, Republican state Rep. Adam Hasner has asked state transportation officials to cancel CITGO's exclusive contract to sell fuel at Florida Turnpike stations. Florida citizens shouldn't have to support an exclusive contract with CITGO, Hasner told AP.
The day after Chavez' UN speech, Maine Governor John Baldacci said his state would not renew participation in a program that provided needy residents with discounted heating oil from CITGO last winter. And in Alaska, a few Eskimo and Indian villages have refused CITGO's discounted heating oil this winter, although other villages accepted.
In Turner, Maine, a selectman initially proposed that the town stop doing business with CITGO, but later withdrew his motion after critics said a boycott would only hurt local businesses. Joan Bryant-Deschenes, owner of a CITGO-branded station in Turner, said her business, B & A Variety, saw a 20% decline in fuel sales in the days after the selectman introduced his proposala drop she attributes to the attention the move generated.
Bryant-Deschenes argued that a CITGO boycott will only hurt small business people, since CITGO does not own any of its U.S. stations. She said boycott organizers should switch to encouraging conservation and making the United States less dependent on oil imports from all nations. Are we worse buying gas from a socialist dictator who's actually been elected twice, or are we better off sending our money to the Middle East? she asked.
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