Bad to Worse: BP Station Owners' Pain Spreads With Oil Spill

bp protest
bp protest

Bob Dudley, the BP (BP) managing director overseeing the clean-up of the worst oil spill in U.S. history, recently told CBS Newsthat his "top personal priority" is to listen to people's concerns. One group he might want to begin paying more attention to are the independent businesspeople who sell his company's gas.

These retailers are bearing the brunt of the public's wrath over the April 20 deadly explosion and sinking of the Deepwater Horizon because they're the most visible symbol of the British oil company. The trade publication Oil Express estimates that BP is the second-largest gasoline marketer in the U.S and sold about 22 billion gallons through roughly 10,000 BP-branded sites and 1,200 Arco AM/PM stores, located mostly on the West Coast.

Station Owners Want More Help From BP

BP does not own most of the stations that bear its name, particularly those located east of the Rockies. In 2007, BP announced it was exiting the retail gasoline business because the margins were lousy. Rivals ExxonMobil (XOM) and ConocoPhillips (COP) did the same. The latest estimates show BP still owns about 200 stations.

Like owners of any other franchise, independent BP station owners -- known as jobbers -- agreed to certain conditions in exchange for gaining the right to use the company's name. Many are locked into iron-clad contracts to sell only BP fuel for the next 10 to 20 years, binding them to a company whose name is becoming synonymous with environmental disaster. The businesses want additional assistance from BP, including more marketing spending, release from some contract requirements and subsidies to make up for lost volume, according to Oil Express.

"Jobbers outside the four Gulf states afflicted by the BP blight -- Louisiana, Alabama, Mississippi and Florida -- say fuel and [convenience]-store volumes are down by 10% as public hostility rises," Oil Express says. "In Ohio, one retailer said he found the oil-covered carcass of an animal dumped on his forecourt. In New York, paint and oil have been splashed on BP signs, and in Kansas, tanker drivers delivering to BP stations have been the target of protests and insults, according to local marketers."

Not Abandoning BP

Embattled BP CEO Tony Hayward promised earlier this month to help station owners "in the best way we can" but has only so far given free signage for stations that promote BP as "part of the community" and a 1 cent per gallon allowance to wholesalers in Florida, according to Oil Express.

BP, which did not respond to a request for comment, has been responsive to the needs of its franchisees and has paid for advertisements that point out they are independently owned, says John Kleine, executive director of the BP Amoco Marketers Association. The impact of the spill on a station varies by region and by location. Some locations in the Gulf Coast have seen declines of 30% to 40%.

Nonetheless, station owners are willing to ride out the controversy surrounding the spill. Few are interested in dumping the BP brand.

"Very few, if any, have said that's what they want to do," Kleine says, adding that his organization continues to press the company for more help. "There's a belief that this can be rebuilt as a strong brand."

Every Oil Company Has Skeletons in Their Closet

Besides ignoring the economic realities of the gasoline business, Mother Jonespoints out a more practical problem with boycotting BP. Every oil company has skeletons in their closet, whether it's the Exxon Valdez, Shell's controversial relationship with the government of Nigeria or the fact that Citgo is controlled by Venezuelan strongman Hugo Chavez. That's why many environmental groups have not joined in a call for a boycott championed by Public Citizen and promoted on Facebook.

Nonetheless, the spill has enraged many Americans who feel the need to do something to vent their rage, even if it may be counter-productive.

Last weekend, the activist group Code Pink held a variety of protests at BP locations around the U.S., including a few where participants got naked. The affected station owners realized that the protests were nothing personal against them, says Dana Balicki, a spokeswoman, in an interview.

"The conversations I had with them were actually quite congenial," she says. "I don't think we're punishing the small business owner.... The finger needs to be continually pointed at BP than back at the Administration."