Americans are angry with BP. The pictures of oil covered birds and videos showing thousands of gallons of oil gushing from the ocean floor are purely awful. They have led many drivers to boycott BP gas stations. This action may be futile, but could it also be inadvertently harming the wrong people?
That was the assertion of an article in the Chicago Tribune this week. It said:
So, whose bottom line are you hurting with your personal BP boycott? BP gets a little from being a franchise owner, although a BP spokesman would not say how much. Largely, it's independent service station owners who suffer.
If sales volume drops and BP gets stuck with unpurchased gasoline, it can quickly and easily wholesale the excess to stations that sell gas without a brand name, experts said.
In other words, when you drive past a BP retail station to a competitor, you might actually be pumping oil from BP into your tank without knowing it. Meanwhile, that BP retail station may have to lay off your neighbor in response to its loss of revenue from boycotters like you.
Still, as the Tribune article notes, boycotters might not care: it's about image. And they believe anything that harms BP's name is worth it, even if that means hurting some U.S. businesses. The article also mentions that BP does collect some franchise fees from these retail locations, though they're surely a very small part of its revenue.
CNBC addressed the topic this morning, talking to Russ Scarmella, the owner and managing member of U.S. Oil Holdings. His company is the largest owner and operator of BP stations in the country. As you can guess, he was begging viewers not to boycott. The clip is below.
But he also said that sales are down as much as 10-15% in some stations. If your reaction is anything like mine, then you're also wondering: that's it? Considering how shockingly bad the situation in the Gulf is, a 15% loss of business is pretty minimal. Sure, that's gonna hurt their revenue, but it could surely be a whole lot worse.
Moreover, is it really possible to feel all that much sympathy for these station owners? It's not like the threat of a spill was unheard of. For decades oil accidents have occasionally happened. While this is the worst we've seen, public backlash would result anytime a company spills oil into the ocean. When they signed up to be a franchise, this was a known risk.
These owners may want to consider negotiating with BP to rebrand all of their stations. Often, these franchise agreements are 20-year contracts. But surely BP understands the pressure these retail locations are under, due to its sullied name. It might extend some flexibility on the sign they hang over their pumps. It doesn't necessarily need to say "BP" for the owners to still pay franchise fees to BP and purchase BP oil.
Activists will likely catch on to this tactic pretty quickly, however. When suddenly the neighborhood BP changes its name to "Apricot Oil" or "Road Stop Express," people will begin squinting their eyes. But at least then the stations will weed out some less adamant boycotters who simply glance at the news and now finds the BP name so offensive.