The Wall Street Journal dodders onto the boycott-BP story, writing that not visiting BP service stations won’t hurt BP much and will just hurt independently owned businesses.
Maybe so, but it doesn’t show the former.
Nearly all the 10,000 service stations around the U.S. flying the BP flag are owned by independent dealers that are obligated under long-term contracts to sell BP-branded fuel. Some worry that mounting anger over the spill’s environmental and economic toll could turn the once-highly coveted brand into a liability.
But the actual gasoline the stations sell is a mixture of fuel from multiple refiners or importers, so the direct impact of any slowdown at BP-branded stations is minimal for the oil giant, which can sell excess supplies as private-label fuels to other retailers. Maintaining a brand presence is important to BP, but the marketing segment only represents a sliver of profit for the company.
I don’t think “some” need to “worry.” The liability is already a fact, as the Journal’s own reporting shows further down in the piece.
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”).
So how much revenue does BP get from franchise fees? I don’t find it in BP’s financials, so I have a question out to the company.
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.
Not a single neutral person or organization in the lot, much less an anti-BP one. That’s not good enough.
The best I’ve seen in this burgeoning genre of stories comes from ex-Journalite Sharon Begley of Newsweek:
Drive right on by the BP station and pull up to the pumps from Exxon, the company responsible for the Exxon Valdez oil spill of 1989 and, more recently, one of the biggest corporate funders of the movement to tar the science of climate change…
Or roll into the Texaco or Chevron station (Chevron bought Texaco in 2001). Texaco is being sued by people in Ecuador for contaminating their groundwater, causing hundreds of residents to develop fatal cancers and causing other environmental damage near the Lago Agrio oilfield, where Texaco dumped oil-production waste (18.5 billion gallons into open, unlined pits) for almost 20 years…
Or roll up to the Citgo pumps. Citgo is a wholly owned subsidiary of the state oil company of Venezuela, which is ruled by the always-entertaining (except to political opponents he has silenced) Hugo Chávez. A 2009 fire at Citgo’s refinery in Corpus Christi, Texas, sent toxic fumes into nearby neighborhoods for two days.
Uncomfortable giving your money to a petrodictator? There’s a Shell station up ahead. Too bad Shell has been accused of human-rights violations in Nigeria, through its collaboration with the country’s former military rulers who executed activist Ken Saro-Wiwa and eight others in 1995, committed crimes against humanity, and tortured opponents.
That Nissan Leaf is looking mighty nice right about now.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum.