Chevron and Texaco Brand Business Announcement 

Global Marketing Withdraws Motor Fuels Business in Some Areas of the Eastern United States

Chevron Global Marketing announced today it will withdraw its Chevron and Texaco motor fuel brands from the District of Columbia and 12 states: Delaware, Indiana, Kentucky, North Carolina, New Jersey, Maryland, Ohio, Pennsylvania, South Carolina, Virginia, West Virginia and parts of Tennessee.

The decision affects 1,100 retail stations, equally divided by Chevron and Texaco branded sites, as well as our commercial and industrial customers and represents eight percent of Marketing’s total U.S. retail fuels sales volumes. Four field positions will be affected by the action. Neither Chevron’s Manufacturing or Lubricants operations in these states are affected.

“This was a difficult decision for us as we have been part of many of these communities for a long time,” said Interim Vice President of Americas Marketing Cary Knuth. “In the United States, we have had healthy growth in our strong market areas and have added more than 1,400 sites across the country, in the last three years. However, as part of the Accelerate Downstream lead business review, we determined these specific markets no longer meet our profitability goals.”

The move is one more step forward in an integrated approach to improving our Downstream business, Knuth said, and it supports the Downstream’s, including ensure all customers are profitable and create a sustainable, competitive and affordable cost structure. It also helps meet Global Marketing’s own strategic goals of being among the top three brands in the markets where we operate.

The Equity Equation

Not only are Chevron and Texaco brands relatively small players in these markets, but Marketing profit margins are tight because of higher supply costs. Fuel supplied to most of these stations is “non-equity,” meaning it was provided by other refiners. The result: Marketing’s potential profit margin took a hit because it couldn’t supply these sites with “equity” fuel, which is product refined at Chevron refineries. This is aligned with the strategic imperative: non-equity product sales must improve overall portfolio returns.

“In order for us to remain competitive, we need to realize profit along every step of our value and supply chain,” said Global Marketing President Shariq Yosufzai. “By exiting these markets, we minimize our reliance on non-equity fuel and use the resultant savings to build up our retail network in areas where we hold a top three position and have better supply capabilities. We do have other non-equity markets that are profitable such as Texas, Louisiana and New Mexico where it makes good business sense to remain.

“In keeping with our Marketing strategy, it’s decisions like this that exemplify how we can anchor our business in areas where we are strong market players and are supported by a network that enables us to maximize margins,” Yosufzai concluded.

Retail Site De-Branding

Over the next 180 days, Marketing will assist affected fuels marketers and retailers with removing the Chevron or Texaco brands from their sites. The fuels market withdrawal in the east is expected to be complete by second quarter of 2010, and we expect all of the retail sites to continue serving customers under other brands.

“We will continue to examine our portfolio to seek ways to better align Marketing assets with our Manufacturing operations,” Yosufzai said. “Our commitment to the Chevron and Texaco brands remains strong and we will continue to develop and grow all three of our world-class brands – Chevron, Texaco and Caltex – in areas that make good business sense.”

Chevron & Texaco Credit Card Update 

The following is a message from Chevron with further details regarding the cessation of marketing by Chevron and Texaco in the District of Columbia and 12 Eastern states.

   “With regards to the Chevron and Texaco employee/retiree personal credit card, there are no plans to discontinue that program  and/or initiate cancellation of the accounts in the impacted states.  However, the unfortunate situations employee/retiree cardholders will face in the East is the eventual closure of the retail stations in this area. Without nearby Chevron and Texaco stations around them, employees/retiree personal credit cardholders living in this area will have limited use of their credit card except when traveling within our active marketing areas.

   “In terms of communications around the Sales East exit, Global Card Marketing is working with GE Money Bank (GEMB) on the development of a statement insert which is targeted for insertion into impacted customers’ billing statements around mid-January. We are also working with GEMB to provide the Customer Service call centers with FAQ’s to help answer customer inquiries around this subject.  (At this time there is no definitive information as to how Marketing plans to communicate to the general public about this subject.

The attachment above provides a recap of the Frequently Asked Questions and Answers provided to the Credit Card Call Centers in responding to caller inquiries about this change.

As previously communicated in the last update from Chevron’s Global Card Marketing organization, the credit card industry is seeing significant changes triggered by the financial environment and compounded by federal regulatory mandates.  In response, most credit card issuers have taken action.  Chevron’s consumer card issuer, GE Money Bank, is also responding and will be adjusting certain terms of cardholder agreements. 

Beginning mid-October, cardholders will be notified in their statements of upcoming changes that include increases in APR and late fees. 

Communicating term changes is never easy, however, Chevron is committed to ensuring all cardholders are well informed of these changes.  In addition to billing statement messages, customers will receive a statement insert within their bill, as well as a separate letter informing them of the changes.  The information will also remind customers of the many great benefits that remain in place and point them to tools that are available to help them manage their account and avoid fees.   

It’s important to note that the same great benefits and rewards are still in place and most key terms are not changing:

• Card Benefits:  No annual fees, cash access and zero fraud liability all remain the same for Chevron and Texaco cards.
• Employee discount:  Eligible retirees will continue to receive the 10 cents per gallon discount on their Chevron and Texaco “employee/retiree” credit card account.
• Chevron Visa Fuel Rewards Program:  Fuel credits of 10 cents per gallon on all Chevron and Texaco fuel purchases, 3% in fuel credits for non-fuel purchases at Chevron and Texaco, and 1% in fuel credits on non-fuel purchases everywhere Visa is accepted remain in effect.
• Chevron Visa APR:  There will be no change to the APR on our popular Chevron and Texaco Visa card.

As a reminder, thousands of employees utilize automated payments today as a convenient way to pay their Chevron and Texaco credit card bill and ensure their payments are always received by the due date.  You may login to enroll online at www.chevrontexacocards.com

Beginning mid-October, cardholders will be notified in their statements of upcoming changes that include increases in APR and late fees. 

Communicating term changes is never easy, however, Chevron is committed to ensuring all cardholders are well informed of these changes.  In addition to billing statement messages, customers will receive a statement insert within their bill, as well as a separate letter informing them of the changes.  The information will also remind customers of the many great benefits that remain in place and point them to tools that are available to help them manage their account and avoid fees.   

It’s important to note that the same great benefits and rewards are still in place and most key terms are not changing:

• Card Benefits:  No annual fees, cash access and zero fraud liability all remain the same for Chevron and Texaco cards.
• Employee discount:  Eligible retirees will continue to receive the 10 cents per gallon discount on their Chevron and Texaco “employee/retiree” credit card account.
• Chevron Visa Fuel Rewards Program:  Fuel credits of 10 cents per gallon on all Chevron and Texaco fuel purchases, 3% in fuel credits for non-fuel purchases at Chevron and Texaco, and 1% in fuel credits on non-fuel purchases everywhere Visa is accepted remain in effect.
• Chevron Visa APR:  There will be no change to the APR on our popular Chevron and Texaco Visa card.

As a reminder, thousands of employees utilize automated payments today as a convenient way to pay their Chevron and Texaco credit card bill and ensure their payments are always received by the due date.  You may login to enroll online at www.chevrontexacocards.com