Ever since the Boycott BP movement was launched in early May (actually this guy seems to have been way ahead of his time), it has had an upward battle against this confounding argument: The gas you get at a BP station is not actually from BP. So, the argument goes, when you drive past a BP station you are not actually hurting BP at all, just the small business owner of the gas station. Yet, despite this seemingly simple refutation of the boycott it continues to gain fans on Facebook. The number is now close to 650,000. Why is this? Are these people all rubes? Actually no. Turns out the seeming simple argument against the boycott is actually false. Here’s why:
Ryan Chittum over at the CJR sponsored financial news blog The Audit does a great job of blowing a big hole in the boycott won’t hurt BP meme. Here’s his response to a Wall Street Journal article that was trying to say just that.
The problem here is that the Journal doesn’t explain to us how the BP service-station model works. I’m guessing that BP doesn’t just let any old body slap its name and logo on their filling stations. Presumably, it charges a franchise fee and gets a cut of any revenue. Maybe not much for a station or two, but BP has 10,000 affiliates in the U.S. alone, the WSJ reports.
Indeed, a quick Google search finds that at one of BP’s brands, am/pm, the franchise fee is $70,000 plus an ongoing royalty stream of 5 percent revenue (that excludes low-to-no margin gasoline sales).
So if you’re buying candy at a BP franchised station, you’re giving high-profit-margin money to BP. If you’re serious about trying to avoid giving them money, you have to weigh that against the harm you’re doing the business owner (who, let’s face it, is probably not a small businessperson. The Journal quotes the president of Carroll Independent Fuel Co., which purchased most of the 110 BP stations in Baltimore “in an effort to bank on BP’s strong brand name and its push toward an environmentally friendly image.”
I have to say that I don’t really know the economics of individual gas stations either. But I had the same feeling as Chittum. BP must get some value out of having gas stations or they won’t have them. And whatever return they get out of the stations, boycotting them will hurt that return.
Chittum also points out that most gas station owners aren’t small business people anyway. They are owned by relatively large operations:
But more problematically, this story read like a PR plant. Check the sourcing: Florida Petroleum Marketers and Convenience Stores Association, Carroll Independent Fuel Co., which supplies gas to 110 BP stores in Baltimore and owns most of them, “Miller Oil Co., a family-owned distributor based in Virginia Beach, Va., that supplies about 50 million gallons of BP gasoline annually and owns 16 stations,” the chairman of Ricker’s Oil Co, which owns 35 BP stations, and the executive director of the BP Amoco Marketers Association. Oh yeah, also the Petroleum Marketers Association of America.
The real problem with the boycott is where you gonna go. All the oil companies are polluters. It’s a dirty business. Check out the awesome and totally disturbing story in the New York Times today about Nigeria. Here’s a clip:
Perhaps no place on earth has been as battered by oil, experts say, leaving residents here astonished at the nonstop attention paid to the gusher half a world away in the Gulf of Mexico. It was only a few weeks ago, they say, that a burst pipe belonging to Royal Dutch Shell in the mangroves was finally shut after flowing for two months: now nothing living moves in a black-and-brown world once teeming with shrimp and crab.
So the boycott BP debate, at least for now, comes down to whether or not you are willing to boycott your car. That’s something Americans have never been willing to do. Start a Facebook page for that one and lets see how well it does.