While Chevron’s decision last week to pull out of several U.S. markets, the oil major said it is refocusing it’s efforts on key states where its supply infrastructure is strong, a decision that will allow it to compete more effectively.
The San Ramon, Calif. marketer surprised the industry with its announcement to withdraw motor fuels operations in Delaware, Indiana, Kentucky, North Carolina, New Jersey, Maryland, Ohio, Pennsylvania, South Carolina, Virginia, West Virginia, Washington, and parts of Tennessee. Approximately 1,100 independently owned and operated retail stations will be debranded by July 2010.
The stations account for about eight percent of our total U.S. sales volumes. The fuel markets in these states are well served and should not be affected by our withdrawal. Chevron currently supplies more than 5,000 Chevron and Texaco branded stations in the Eastern U.S.
The decision creates opportunities for other branded jobbers looking to grow their business with companies like Valero, Sunoco and Hess seemingly in a good position to pick up new business. Chevron said it has a program in place to assist retailers with their transition.
Company spokesman Gus Santoyo said Chevron is not taking a similar approach to ExxonMobil, Shell, BP and other Big Oil companies that have been shedding direct-store operations. “We will continue to grow in the U.S.,” he said. “Over the last three years, we have added a total of 1,478 sites in the U.S: 1,171 sites in the East and 307 sites in the West. Additionally, we have recently acquired 53 convenience stores from Jack in the Box.”
“So we will continue to do business in the South and Southeastern U.S. Specifically, we will continue to have supply, terminal and fuels marketing operations in Mississippi, Alabama, Georgia, Florida, Texas and Louisiana,” Santoyo added.
Surprises All Around
Still, for Chevron branded marketers, the oil company’s announcement was a complete surprise, said Jan Vineyard, president of the West Virginia Oil Marketers & Grocers Association.
“Many were shocked by Chevron’s decision to withdraw from retail fuel marketing in West Virginia,” Vineyard said. “Several of our members have been long-term Chevron dealers.”
Many distributors are looking at other companies to secure deals to supply gasoline for their stations. “We believe the distributors will work hard to find the best option for going forward to meet the needs of their customers,” Vineyard said. “Many have been making calls all week to come up with a course of action. They will focus on finding an alternative supplier to meet demand.”
With a number of oil company consolidations, some brands of gasoline may not be readily available to West Virginia.
“Product might have to be brought in from farther away by truck,” Vineyard said. “However, many are working hard to make sure they will have product and it will be available to their customers.”