A few years ago, I wrote about how I stopped buying gas from 7-Eleven based on a rumor I heard. At the time, I was under the impression that the gas sold at 7-Eleven was owned by Venezuela. This assumption led me to believe that purchasing their gas would be supporting the previous dictatorship regime of Hugo Chávez, which led me to take my business elsewhere. I realized I was basing this belief off what a friend once told me — a friend whose name I can’t even remember. I had never checked my facts! Out of curiosity, I revisited this article and made some updates based on current events. It’s always a good reminder to research rumors you hear, even when you hear them from a trusted friend.
My boycott of 7-11 was based on a rumor, so I did some research to get the facts.
It was bothering me that I had been punishing a business that, previously, I had nothing against. I was basing my decision to boycott the gas at 7-Eleven off merely a rumor! Years ago, Venezuela-based petroleum company Citgo used to supply gas to 7-Eleven, but 7-Eleven cut ties due to the country’s leadership at the time, Hugo Chávez. 7-Eleven has supplied its own gas ever since. Oh thank heaven! I was happy to find they were not buying from Venezuela, but disappointed that I had been avoiding them on a false truth. The idea was based on truth, but it was completely outdated and missing a major part of the story.
During my research, I also found a few interesting stories about Citgo, the Venezuelan company that used to supply gas to 7-Eleven as well. On May 15, 2017, the Wall Street Journal published an article in their print publication titled “Dozens of Creditors Crowd Around Citgo.” The article explained that Venezuela owes creditors for bonds totaling approximately $100 billion. One of the only producing assets that Venezuela owns is Citgo. As a result, Venezuela has pledged all Citgo equity as collateral. This means that all the profits from Citgo go directly to both the bondholders and to the state-owned Russian oil producer, Rosneft.
So how do the bondholders plan to get repaid and protect their assets? Wall Street determined it is not a question of “if,” but “when” Venezuela will default on their bond loans — which they ended up doing in late 2018. Imagine that… a “socialist” country ran by a dictator going bankrupt!
Over the last 30 years, Venezuela has nationalized various private businesses and assets. The oil industry was an especially big target of nationalization and not properly compensated, except for Citgo. In 1986, 50% of Citgo was sold to the state-run Venezuelan company Petroleos de Venezuela SA (PdVSA). In 1990, the remaining 50% was again sold to the same company.
When dictator Hugo Chávez died in 2013, he left behind an economic crisis in Venezuela. As a result, Nicolás Maduro, who won the presidency following Chávez by slim margins, has been using his power over the military to control both the people and the legislative process. His presidency is still contested. As Maduro expropriated certain industries, he began to use PdVSA to pay for the generous social welfare benefits he promised in order to win votes; a tactic that has since backfired. This system does nothing to save for a rainy-day fund necessary for future problems. In addition, as private businesses were nationalized in this system, new businesses were discouraged to start up.
Today, Venezuela depends on oil for about 95% of its export revenue with no diversification in sight due to the previously mentioned challenges for businesses. With the recent drop in oil prices, there has been a 75% decrease in Venezuela’s oil revenue.
As always, there is so much more to the story. It is complex and not always clear as to where, who, and how it all works. I could spend a lot more time researching and learning about it all, but there are more pressing things to accomplish in my life.
With all this information, I learned that 7-Eleven’s gas is no longer from Citgo, but I can confirm that Citgo was is in fact owned by Venezuela. Now, I can rest easy knowing that all the 71,000+ 7-Elevens around the world have nothing to do with Citgo. On the other hand, the story makes it clear that nothing is so simple. The planet is getting smaller, not from global warming, but because we truly have become a world economy. And I am not just talking about the fact that 7-Eleven, which many of us think of as “All American,” was purchased out by a Japan-based company starting back in 2005. I mean entire economies around the world desperately depend on one another. Citgo is the perfect example. Its assets are all United States based, which complicates the situation for all the creditors, especially the Russian oil producer, Rosnef. It’s incredible what complications can arise when a private industry is nationalized, and those industries mix around the world!