BP boycott, as effective as a scarlet letter

More than one million Americans have agreed to boycott BP gas stations. Some have pledged privately; others have pledged more publicly through Public Citizen’s boycott page on Facebook. 

But this boycott will barely smudge the already tarnished reputation of the oil giant and kill instead 100,000 jobs at local gas stations and family-owned convenience stores.

Obviously boycotting is a popular reaction to the 60 days of oil gushing into the gulf thanks to BP’s lack of adequate safeguards in its deepwater drilling activities.

Certainly a boycott gives everyday Americans a feeling like they’re doing something to help. But boycotting does not help the disaster. And it certainly does not hurt BP as much as people think.

Perhaps Americans should be more concerned with avoiding gas stations altogether; Buying gasoline from some other oil giant that happened to avoid any disasters hardly seems like taking much of a stand.

It’s worth noting that many unmarked gas stations sell BP gasoline so boycotters may unwittingly continue to buy BP gas.

There are about 10,000 BP-branded gas stations, franchises, nationwide. Most have convenience stores attached.

Those stations are largely family-owned and employ about 100,000 people collectively, according to the Savannah, Georgia-based BP Amoco Marketers Association.

Not buying gasoline from those stations hurts families and represents little more than a slap BP on the wrist for its lack of oversight and protection from the spill.

I spoke with John Kleine, the executive director of the BP Amoco Marketers Association, to see why a BP gas boycott is not a good idea.

First, most of the profits from a gas station come from the convenience store operations, not from selling gasoline.

According to 2009 statistics from BPAMA, of a $2.70 gallon of regular unleaded gasoline last year, gas station owners only took home about 12 to 14 cents in profit.

About 50 cents goes to local, state and federal taxes that are used to bankroll the federal highway fund, used to repair roads and build highways.

That leaves about $2 which is used to pay for the cost of the crude. That goes to BP, but not necessarily into its profit margin.

BP earns most of its profit from its upstream business—exploration and drilling.

Kleine said, the money BP makes on refining and marketing, its downstream operations, “ is very low compared to the rest of the business.”

Gas station owners, on average, earn more than 60 percent of their profit from sales inside their convenience stores.

As more Americans begin boycotting BP gas stations, gas station owners have gone to Kleine terrified of their fate—going bankrupt, unable to put food on the table for their families and adding more Americans to the unemployment line.

BP used to own and operate the gas stations themselves.  Some years ago, however, they divested over to a fuel-industry middleman called a “jobber.”

Jobbers get inventory from oil giants. Then they sign volume contracts with gas station owners who order and pay for their gasoline in three, six and 10-day cycles.

“So, the effect [of a boycott] will be primarily on those local business people,” Kleine said.

If people stop going into BP-marked gas stations and convenience stores, station owners will have to stop ordering gasoline and end their financial contracts with the jobbers.

Many will incur a penalty for breaking those long-term contracts, according to the BPAMA.

“[The boycott] could have a devastating effect,” Kleine said.

Stations that were barely making ends meet, “those stations that were average? [a boycott] could close em.”

“It wouldn’t take much to do that,” Kleine said.

There is another out besides bankruptcy for the gas station owner. The station manager could try to purchase fuel from another oil giant. But it would have to break its 3-5 year franchise agreement with BP. That costs money.

“This [boycott] is not gonna hurt BP; it’s gonna hurt the local business person. Typically the consumer hasn’t in the past known that,” Kleine said.

One of my sources, a mother of three, perhaps aptly said, “accidents happen.” Period, she said. BP is dealing with it.

The company has agreed to set up a $20 billion escrow fund to pay for cleanup. The company has established 25 offices in 4 gulf states to help compensate businesses for their losses; BP has already paid out more than $53 million in loss claims, and about $1.43 billion so far for cleanup.

Blinded by their fury, Americans seem to forget that BP got a lease from the federal government fair and square to drill the gulf for oil that we would otherwise buy from foreign governments, oil is used to fuel more than just our automobiles.

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