BP Plc is leaving it to distributors to dole out the aid, including reduced credit-card fees and fuel rebates of one cent a gallon, to help make up for consumer backlash over the Gulf of Mexico spill, company spokesperson Scott Dean said.
"Giving the money to the distributors is not [image-nocss] doing anything for us," Lori Reid, who has owned one BP station in Topeka, Kansas, for six years, told the news agency. "That is one thing that really upsets me about how BP is handling this."
Frustration is mounting as the entrepreneurs who own more than 95% of BP's 11,500 U.S. gas stations reportedly lose sales to angry consumers who have no way to punish the London-based oil company directly. Bob Juckniess told Bloomberg that sales declines at his 10 Chicago-area stations worsened to 20% in June after BP failed in a so-called top-kill effort to plug its leaking well.
Most U.S. stations are owned by individuals rather than the major oil companies whose names they bear. About 80% of U.S. refined fuels are sold by the nation's convenience stories. Of the almost 115,000 convenience outlets that sell gasoline, 57% have one-store owners, according to 2010 data from the National Association of Convenience Stores (NACS).
The aid package, unveiled last week to distributors (click here for previous CSP Daily News coverage), equals about $5,200 per station. BP said relying on distributors will ensure the retailers hurting the most get the most help.
"My fear is that the money won't flow down to the individual station owners," Juckniess said in an interview with Bloomberg at his station near Chicago's Midway Airport. "When you're talking about a penny a gallon, it's not a whole heck of a lot."
Two of the distributors Juckniess deals with have agreed to give him the one-cent incentive. The third, Atlas Oil Co. of Taylor, Michigan, said it will instead help with capital projects at stations, the report said.
"It will be more longer-lasting at their sites, rather than, 'Hey, here's $1,000'," Michael Evans, executive vice president of business development at Atlas, told the news agency. "What we want to build is something long term."
Campaigns to boycott BP retailers intensified in June after several efforts to stanch the flow failed in May, station owners said.
"The greatest impact has been over the last month because people thought it was going to get plugged," John Phelps, president of Carroll Independent Fuel Co., a Baltimore-based distributor, told Bloomberg. People have written "stop the leak" on pumps in permanent marker and taped up pictures of dead turtles at BP stations, Phelps said. But he said fewer than 20 of the 105 BP stations to which he distributes fuel have seen sales drop. "People are separating us from the tragedy down in the Gulf," Phelps said.
Dean said the spill's impact has varied by location and customer type. For instance, boycotts have hurt sales most in the Gulf Coast region, he said. Stations on highways with other brands around them have lost more sales than outlets where customers know the local owners, he added.
Stanley Roberts, president of fuel distributor Capital Oil Inc., Jackson, Miss., said Gulf Coast retailers are "being hammered" as the spill also keeps tourists away. He told the news agency that he has heard sales at some coastal stations are down as much as 30% from last year.
Station owners said BP rebates to consumers of five to 10 cents a gallon might help win back customers.A Crain's Detroit Business report offered additional details on Atlas Oil's considerations on investing in capital improvements and image building for its network of BP gas station retailers hurt by fallout from the oil spill.
Evans told the publication that Atlas is still deciding exactly what to do with as much as $300,000 in rebates from the oil company, starting with an initial payout next week.
Atlas Oil is distributor to about 70 BP stations in Indiana and Illinois, including 11 as owner-operator, out of nearly 400 gasoline c-stores in Illinois, Indiana, Michigan and Ohio.
"We've seen about a 10% reduction in use at [BP stations] through those markets [Indiana and Illinois]. You can't really attribute it to really anything other than the gulf right now," Evans told Crain's. "Demand's not real robust right now in the market as a whole, but the decline doesn't account for all of that."
The distributors, who in cases like Atlas Oil own and operate some of the affected stations, can pass along some of the savings to motorists in the form of cheaper gasoline, said the report.
The distributor is also considering using some of the rebate money toward a capital improvements fund to make enhancements to its network of BP retailers.
"The new rebates actually go to the distributor, and the distributor then figures out how best to help the retailers grow their business, in terms of helping them rebuild in their markets," he said. "So we're looking at programs where we invest capital in a location, to make it friendlier to the consumer, whether it be a new sign or curb appeal, or a new service it can offer. We're kicking around those ideas."
BP has said the cash to distributors is for gallons purchased in June, July and August, the report said.
Evans said Atlas Oil will reach a final decision on how to allocate the funds by the time the June payment is distributed in mid-July.
If BP stations average more than 100,000 gallons sold per month over the affected period, Evans said the rebate could amount to more than $1,000 per station, or nearly $100,000 per month each of the three months.
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