BP Station Owners See Business Rebound as Oil Spill Anger Fades
Media reports during the summer were filled with speculation about whether independent BP gas station owners would ditch the brand of the beleaguered oil company because of the horrible publicity over BP's (BP) Gulf of Mexico oil spill. By and large, though, that didn't happen, and in the months since the environmental disaster, business at many stations has rebounded.
Some activists looking for ways to express their disgust over the Deepwater Horizon catastrophe had called for boycotts of BP stations, but station owners were able to respond successfully by hammering home the message that the U.K. oil company doesn't own most of the retail locations that bear its name. There are about 10,000 BP-branded stations east of the Rockies, while the company's stations in the Western U.S. operate under the ARCO name. BP announced in 2007 that it was exiting the retail gasoline business because the margins were lousy, though it still owns about 200 stations, according to the latest estimates.
"Going in the Right Direction"
At the height of the publicity maelstrom, business at BP stations did suffer for a while, with volumes tumbling by double-digit percentages, particularly in areas near the Gulf of Mexico. BP stations in other states also saw a drop-off in sales, though to a lesser extent.
Station owners have seen a recovery though -- not surprisingly -- the performance of the Gulf state stations continues to lag. Even with the improvement, business is hardly robust given the economy and the price of gasoline. More specific information was not available, and company spokespeople were not available for comment.
"People remember the Exxon Valdez [disaster], and people are never going to forget the BP oil spill," John Kleine, executive director of the BP Amoco Marketers Association, told DailyFinance. "Things have turned around and are definitely going in the right direction. . . . Rebranding was a popular rumor, but I know of very few people who did it."
For one thing, independent station owners -- also called jobbers -- sign hard-to-break, multiyear contracts to gain the right to sell a certain brand of fuel. In exchange, they receive marketing support from the oil company. Even if they could have quit BP, many jobbers probably wouldn't have wanted to, because it would have required them to reintroduce themselves to their customers, a potentially costly endeavor.
Old-Fashioned Marketing
Some BP station owners took matters into their own hands and got creative. When the spill was still big news, volumes were off by 6% to 7% at some of Jay Ricker's 38 BP stores in Indiana. So the co-founder of Ricker's Oil Co., who had on previous occasions dressed up as a clown for charity work, decided to break out the clown suit, get out of his office and go meet the public. Most of the 2,000 or so people he met found the stunt amusing, though a few vented to him about the spill. Business did improve.
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"I am a big believer in old-fashioned marketing" says Ricker, who spent three to five hours a day in his clown get-up, offering his customers free fountain sodas to beat the heat. Even the people who did bring up the Gulf disaster with him seemed impressed that the owner of a gas station would go to that much effort to win his customers over, he says.
BP station owners got some good news today after a Presidential Commission concluded that there was plenty of blame to spread for last year's disaster. Shares of London-based BP are rallying. According to Kleine, there has been a "strategic shift" in the relationship between BP and its jobbers. In a speech before the group's convention in October, BP CEO Robert Dudley told them "you are our brand."
Looks like the message got through.
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