A lot of us are surprised this didn't happen sooner, I'm sure. After years of harassing, assaulting and insulting Hugo Chavez, Venezuela's president has struck back with a blow that will probably hurt Americans far more than airplanes hitting towers.
http://www.businessweek.com/...
JUL. 12 11:41 A.M. ET Venezuela-owned Citgo Petroleum Corp. has decided to stop selling gasoline at some 1,800 stations in the United States following calls by President Hugo Chavez to nix contracts that benefit U.S. consumers more than Venezuelans.
Citgo, which is wholly owned by Venezuela's state oil company, currently has to purchase 130,000 barrels a day from other refining companies to meet its service contracts at 13,100 stations across the U.S.
The Houston-based company has decided to sell only the 750,000 barrels a day that it produces at three U.S. refineries in Lake Charles, Louisiana, Corpus Christi, Texas, and Lemont, Illinois, according to a statement late Tuesday.
That will mean that over the next year Citgo will withdraw completely from 10 states and stop supplying some stations in four additional states, Citgo spokesman Fernando Garay said Wednesday.
Once the impact of this hits, expect gas to be no less than $4/gallon. There is no way we're going to be able to make up a shortfall like this.
Edit: Thanks for the recommends all.
Update: dpdata says:
Will not affect the price (15+ / 0-)
of gas negatively, maybe positively.
Under this scenario the amount of gas on the market stays the same.
All it means is that the gas Citgo couldn't produce itself will not be avialble for distribution to someone else, meaning, fewer gas stations. The actual supply of oil stays the same.
In fact, it may lead to a very slight reduction.
Why?
Because that middle transaction adds overhead and an additiona layer of markup.
So, now, those 130,000 barrels are still going to be sold just now by Citgo, probably by the refiner themselves - like Mobile or BP or someone.
My take is that while that may be true, I don't think it's going to stop the gas companies from hiking the price based on this not for any legitimate reason, but because they can.