July 6 (Bloomberg) -- Owners of BP-brand gasoline stations may receive little or no help from a $60 million aid package as they try to cope with a sales slowdown that intensified after failures in May to end a record U.S. oil spill.
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 spokesman Scott Dean said.
“Giving the money to the distributors is not doing anything for us,” said Lori Reid, who has owned one BP station in Topeka, Kansas, for six years. “That is one thing that really upsets me about how BP is handling this.”
Frustration mounts as the entrepreneurs who own more than 95 percent of BP’s 11,500 U.S. filling stations lose sales to angry consumers who have no way to punish the London-based oil producer directly. Bob Juckniess said sales declines at his 10 Chicago-area stations worsened to 20 percent in June, after BP failed in a so-called top-kill effort to plug its leaking well.
Most U.S. filling stations are owned by individuals rather than the major oil companies whose names they bear. About 80 percent of refined fuels in the U.S. are sold by the nation’s convenience stories. Of the almost 115,000 convenience outlets that sell gasoline, 57 percent have one-store owners, according to 2010 data from the National Association of Convenience Stores in Alexandria, Virginia.
BP, which said yesterday that it has spent $3.1 billion responding to the spill, generated net income of $67.5 million a day on revenue of $812 million a day in the first quarter.
The aid package, unveiled last week to distributors, 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 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 filling stations.
“It will be more longer-lasting at their sites, rather than, ‘Hey, here’s $1,000,’” said Michael Evans, executive vice president of business development at Atlas. “What we want to build is something long term.”
The spill began after an April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 workers. BP’s leaking Macondo well is spewing as much as 60,000 barrels of oil a day into the ocean, according to a government estimate.
Campaigns to boycott BP retailers intensified in June, after several efforts to stanch the flow failed in May, station owners said. The company is drilling a relief well, scheduled for completion in August, to intercept and plug Macondo.
“The greatest impact has been over the last month because people thought it was going to get plugged,” said John Phelps, president of Carroll Independent Fuel Co., a Baltimore-based distributor.
People have written “stop the leak” on pumps in permanent marker and taped up pictures of dead turtles at BP stations, Phelps said. 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.
Sales Drop 30%
Dean, the BP spokesman, 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 said.
Stanley Roberts, president of fuel distributor Capital Oil Inc. in Jackson, Mississippi, said Gulf Coast retailers are “being hammered” as the spill also keeps tourists away. He said he heard sales at some coastal stations are down as much as 30 percent from last year.
Station owners said BP rebates to consumers of five to 10 cents a gallon might help win back customers. P. Noble, a Stickney, Illinois, resident who was buying fuel at a BP station in Chicago, said such savings wouldn’t engender loyalty.
“It’s not even the prices,” Noble said. “I’m more socially and consciously involved in what’s going in our community and our world. It’s just terrible right now what’s going on.”
To contact the reporter on this story: Leslie Patton in Chicago at firstname.lastname@example.org.
To contact the editor responsible for this story: Susan Warren at email@example.com.