BP Collateral Damage, Take 2
Image by Rusty Boxcars via Flickr
Yesterday I sympathized with the pension funds, unions and other innocent BP shareholders who are suffering mightily in the aftermath of Deepwater Horizon. Today’s NYTimes mentions another group that I had not even thought of: Owners of BP gas stations.
Like probably the vast majority of Americans right now, I have driven past any BP station, even if its prices are lower than the Exxon or whatever a few blocks farther. Aid and abet that dastardly company? Not virtuous Claudia, no way no how.
I simply didn’t think. It never occurred to me to inquire whether, in fact, BP owned those stations, or whether I was simply penalizing some hapless franchisees who had no more to do with the oil spill than I did. That’s why I winced at the Times piece. Among the assorted facts: Of the 11,000 BP gas stations extant in the US, BP owns fewer than 700 — and it’s been trying to sell those for a while. And as for BP’s share of franchisee sales: way under $1 per fill-up.
“What BP gets from this is probably a rounding error in terms of overall revenues or profits,” said Jeff Lenard, a spokesman for NACS, an association of convenience stores and gasoline retailers.
But it gets even better: Go to a no-name gas station and chances are good you are actually supporting BP:
And the gas that people buy when they fill up elsewhere? Fuel from independent gas stations, grocery chains and big-box wholesale clubs sometimes comes directly from refineries or wholesalers that BP owns outright.
Clearly, boycotts inflict minimal, if not zero, damage on BP, and maximum damage on others. But that’s not stopping a burgeoning call for BP boycotts on Facebook, or environmental protests in front of BP stations. Still, there are some rational voices coming from a surprising quarter: Greenpeace, recognizing the unfair collateral damage, is pointedly not asking anyone to boycott BP. Instead, it is commandeering a former BP catchphrase and asking its supporters to go Beyond Petroleum — in other words, drive less, buy hybrid cars and support quests for alternative energy.
Belatedly but emphatically, it has my applause.
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One more disproof of the libertarian fantasy of self-regulating free markets, I guess, if by driving past the BP stations to the other guys, you’re actually increasing your consumption of BP products and pumping up their profits.
If consumers can’t reliably express their preferences through their market choices, if they can’t send profit signals to the companies they wish to reward, then free markets can never work. If the corporation gets your money regardless of whether you wanted it to or not, then the heavy hand of government is the only force that can constrain destructive corporate behavior.
but there’s another alternative –transparency.Educated consumers could know when they are supporting a corporation, a franchisee or a competitor.
In response to another comment. See in context »On paper, sure, but how do you envision “transparency” operating in this situation? Would the gas tank have a chart of the chain of manufacture, from extraction, to refinement, to shipping?
Or would it be a chart of financials describing the ultimate destination of every dollar spent at the gas tank? It’s really easy to say that gas stations should divulge how much money they funnel to BP, and it’s not hard to imagine your local stations competing on that basis with huge signs out front – “We send only 6 cents of every dollar to BP!” “Well, we send only 5!” – but that’s just because BP’s the whipping boy of the day. Maybe tomorrow it’s Exxon whose the bad guy, and all our information about how much the gas station sends to BP doesn’t help us make the decisions we want to make now.
The problem isn’t one of transparency, I think. All the information about profits and finances is largely available to the public. The problem is that the information is itself overwhelming, and largely inaccessible and incomprehensible right at the time when we want to make the decision. The structure of these corporations and their financial entanglements decouples their revenue from their appearance as entities.
The libertarian fantasy is that, if you hear on the news about Joe’s Diner giving people food poisoning, the fact that you’ll stop going there is all the regulation they need. The reality, though, is that it turns out that, unbeknowst to you, Joe’s Diner is cooking for all the other restaurants, too.
In response to another comment. See in context »I was thinking of something much simpler than that. I just meant that, rather than simply a BP sign, a gas station that had a big sign saying “Independently owned by John Q. Smith” or whoever would resonate with a lot of people, and might elicit sympathy rather than anger.
In response to another comment. See in context »But just being a franchisee is not a good excuse – BP gets a cut, and they act as the supplier for many stocked goods. Plus the franchisee pays a regular franchise fee, on top of what they paid to purchase the franchise in the first place.
Are these people “innocent”? Didn’t their support of BP indirectly aid and abet the company? It’s not personal, but how else am I supposed to send a market signal against depraved corporate indifference to safety and to the environment?
In response to another comment. See in context »But they are innocent. They have as little input into BP’s policies as we do. When Enron blew up,much of public outrage was fueled by the fact that innocent Enron employees saw their 401Ks wiped out. We recognized they were victims, not perps. Same with the BP franchisees, I think
I guess I don’t think of it as “guilt” or “innocence”, I think of it as “they’re my dollars, and are they going to be funneled to rapists of the environment, or not.”
But, of course, these intricate financial networks mean, no matter where I choose to spend, BP gets my money.
In response to another comment. See in context »And to make a grisly situation grizzlier — it’s not as though any of the others are any better. BP is just the villain du jour. This is an awful industry. But since I refuse to stop driving my car, I can’t in good conscience harangue others…
In response to another comment. See in context »I have to say, this is a weak argument. If anything, it’s the corporate entity that owes it to their franchise operators to (a) clean up the mess that’s affecting the franchisees’ business, and (b) put the safeguards in place to make sure it never happens again. BP relies on franchisees as their distribution channel, so it’s in their best interest to keep them from losing business.
Let me give you an example:
McDonald’s had been under siege by consumers for years when they abandoned fast food in much greater numbers because the menu options were so limited to deep fried crap. Others took McDonald’s model and offered healthier options and were winning.
Guess what? After losing enough business to finally get the corporate HQ’s attention, they did an overhaul of the menu and outfitted all the franchise stores with new equipment to handle the demand for new food choices like salads and grilled chicken. Did it take years to accomplish this? Yes. But now McDonald’s has turned their stock around and is meeting its obligations to shareholders, franchisees, and yes, consumers.
I think there’s a lesson here for the folks at BP.
But where’s our disagreement? BP absolutely owes its franchisees, and is responsible for doing everything possible to restore its/their good name. I’m just saying that we, as consumers, should not penalize the franchisees for BP’s malfeasance. The company is not ducking responsibility for the oil spill, after all, so I don’t know what message we’d be sending by boycotting — other than to drive some poor shnooks out of business
In response to another comment. See in context »Our disagreement is this: you say we should not put BP’s franchisees out of business by boycotting and I say consumers vote with their feet. The onus is not on the consumer to save BP’s franchise operators; it’s on BP.
In response to another comment. See in context »we’ll agree to disagree. I maintain it is BP’s responsibility to restore it’s good name by good actions, and shareholders should vote with their feet if the company welches. But I see zero accomplished by consumers boycotting franchisees
In response to another comment. See in context »So gas station owners are owed a living? Businesses should continue making money off us even as they destroy our economy, our natural resources, and engage in other practices that we don’t want to support – because otherwise somebody might get hurt?
I was complaining that these complex interdependent networks make sending market signals impossible. You’re now arguing that they shouldn’t be sent at all.
In response to another comment. See in context »Justin, you know that’s not what I’m arguing. All I’m saying is that this is an awful industry, the only signal we could all send is to drive less, but as I’ve mentioned earlier, since I’m not putting my car in mothballs I can’t ask anyone else to. And no one is “owed a living” — but the franchisees are not the ones who “destroy our economy, our natural resources, and engage in other practices that we don’t want to support” And we are accomplishing nothing by boycotting joe shnook, BP franchisee, in favor of john shlemiel, Exxon franchisee.
And no one is “owed a living” — but the franchisees are not the ones who “destroy our economy, our natural resources, and engage in other practices that we don’t want to support”
No, but supporting them means supporting those who do.
It simply can’t be a consideration when we’re deciding who to reward with our business. Imagine two companies that manufacture burritos, only one company makes them out of Chinese fetuses. (Ew!) In my world, we stop buying those burritos because cannabalism isn’t a business model we want to reward. In your world, we can’t tell people not to buy fetus burritos, because those poor people who sell the fetuses, the poor people who grind them, the poor people who cook them, the poor people who assemble and pack them – all those people have families, it’s not their fault the meat comes from where it comes from, and it’s “not fair” to punish them along with the CEO (who is the one who decided to start using fetuses.)
I guess for me, it actually is your fault who you decide to do business with. Now, it may very well be the case that driving along to the Exxon station actually puts more money in the hands of BP than stopping at the BP station – paradoxically – but, again, that’s a function of a market structure designed to insulate corporations from any consequences of their business practices. It’s wrong.
In response to another comment. See in context »Okay, but lets say we discover the company makes burritos out of Chinese fetuses. And two months ago we discovered its main competitor makes them out of Malaysian fetuses. And a year ago we learned that the biggest burrito maker was deliberately impregnating Chinese slaves in order to abort their fetuses…
All I’m trying to say is that Exxon, Chevron, BP, there’s not a good actor in the bunch. And taking money from the BP franchisee to give to the Exxon franchisee is not sending a signal to the industry in general, it is just rewarding yesterday’s front-page villain at the expense of today’s. And the no-name stations never tell us whose gas we’re buying. It’s a no-win situation for us, and demonizing the franchisee isn’t the best answer.
In response to another comment. See in context »Claudia… “there’s not a good actor in the bunch”. Is that the same thing as saying they all deserve to be treated the same because they are all bad actors? At some point good corporate behavior must be fostered, and bad behavior must be punished. We should live in a world where corporations and their leaders leaders live in fear of the consequences of fouling things up. Boycotts make for headline histrionics. But they won’t do a damn bit of good. Voting for congressional candidates that can resist the temptation of corporate franchise ownership of their elected office is a good start. In the interim, I will continue to buy my gas and coffee at the local BP (where the morning clerks treat me with a smile and a quick check out), and will be begin shopping for a hybrid.
In response to another comment. See in context »I’m with you — and if someone can point to a good actor among the oil companies, I’ll happily patronize their stations. But until then, say hi to the BP clerk for me…
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