AP Enterprise: BP stations consider other brands
Oil has stopped spewing into the Gulf of Mexico, but BP remains unusually vulnerable to the prospect of U.S. gas stations defecting to other brands.
In interviews with The Associated Press, station owners from Wisconsin to Virginia say BP dealers are being courted by other brands or are approaching them on their own.
While the practice is common in such a competitive business, it has become more frequent since the April 20 offshore rig explosion and spill that tarnished BP’s image and led some customers to go elsewhere for gas, the owners say.
"The door was opened when the Gulf leak happened and people will pry on those emotions," said Randy Meffert, who together with his brothers owns, operates or supplies 52 gas stations in south-central Wisconsin. All but eight fly the BP flag.
BP is expected to detail its strategy to repair its brand when it meets with hundreds of fuel distributors next week in suburban Washington. The meeting comes at a critical juncture. Sales have rebounded, but are still down at some stations that saw sharp declines after the spill, even though BP offered incentives to help them get through it.
BP owns just a fraction of the more than 11,000 stations across the U.S. that sell its fuel, mostly under the BP banner. ARCO, a BP affiliate, is predominant in the West. Most BP-branded stations are owned by local people whose primary connection to the oil company is the logo and a contract to buy gasoline.
Those contracts can range from several years to more than 20, and BP would not say how many are up for renewal this year.
BP will not say what it plans to announce at the meeting with distributors. But two members of a trade group that helped organize the meeting told AP that, among other initiatives, BP will offer to pay for $10 gift cards for stations to give customers who buy a certain amount of gas, and it will fund a program for stations to donate to local charities. The members asked not to be identified because the details are supposed to be confidential until announced.
It is not clear if a name change suggested several months ago by some station owners will be on the table. The idea continues to percolate, but has not resonated with a majority of owners.
Will the latest offerings be enough to keep BP station owners from leaving the fold?
Jeff Miller’s company owns, operates or supplies roughly 56 BP-branded stations, primarily in southeastern Virginia. He said stations that he supplies but doesn’t own are telling him they are considering switching to another brand when their contracts to sell BP gasoline are up.
"There may be a Shell or Chevron and they will go to the BP (station) and say, ’If you want to get rid of BP, we can put Shell in there,’" Miller said. "That is occurring on a fairly regular basis."
Such discussions aren’t unusual, but Miller says the competition now has more ammunition.
"Any of our dealers dissatisfied with the BP brand with everything that’s going on, now they are saying, ’What other brands do you have to offer, Miller, because I got these guys from Shell and Chevron calling me?’" he said.
Bob Juckniess, who owns 10 BP-branded stations in the Chicago area, said the approaches from other companies are "rampant right now."
"I think it started with the disaster that happened in the Gulf, but I think it was followed very strongly by how BP handled the situation," Juckniess said.
He said he wants to see BP commit to changing its corporate culture from one he believes is focused on profits to one focused on safety.
"If they do not realign the corporate culture from the top down, then they are bound to make the same mistakes that they have in the past," Juckniess said.
Some distributors and owners aren’t ready to dump BP, and they’re trying to encourage their peers to stick it out.
Among them are Bill Tome, whose company supplies BP gasoline to stations in the Charlotte, N.C., area, and Max Alvarez, whose Sunshine Gasoline Distributors is one of the largest suppliers of BP-branded gasoline in Florida.
Tome said he understands the hesitation of some station owners and suppliers to continue to carry the BP banner. He hopes those who attend the conference at least hear the company out.
Alvarez said that as long as BP remains competitive, it will keep its brand intact.
"I think people who really understand and look at this situation would have a positive feeling about BP simply because they had an accident, they accepted it and they never turned their back on it," he said.
BP spokesman Scott Dean said in an e-mail to the AP that the company is committed to its independent business partners who sell BP-branded gasoline.
"We continue to meet regularly with our customers and believe they will reserve judgment on BP until our response and restoration work is done," Dean said.
Roughly 600 people will attend next week’s conference, including distributors, top BP officials and vendor partners, according to John Kleine, who heads a trade group that represents distributors of BP gasoline in the U.S. Media won’t be allowed to attend.
Kleine said that given the fallout from the oil spill, this year’s gathering will probably be the most important since the BP-Amoco merger in the late 1990s.
"Why?" Kleine asked. "You go back to the trust, confidence and commitment. It has to be demonstrated."