APNewsBreak: Trade group says BP to give cash to gas stations due to lost sales from boycotts
HOUSTON – HOUSTON (AP) — Oil giant BP PLC is floating a financial lifeline to the owners, operators and suppliers of the gas stations around America that bear its name and have been struggling because of boycotts prompted by the Gulf spill.
The head of a trade group that represents distributors of BP gasoline in the U.S. told The Associated Press on Tuesday that the company is informing outlets that they will be getting cash in their pockets, reductions in credit card fees and help with more national advertising.
The cash component will be based on distributors' volume and will be higher for outlets along the Gulf Coast than for those elsewhere in the country, said John Kleine of the BP Amoco Marketers Association.
"They are going to get a check," Kleine said. "They're being given these dollars for use in their business."
He estimates the total package BP is offering at roughly $50 million to $70 million.
Some BP-branded gas stations have reported sales declines of 10 percent to 40 percent from Florida to Illinois since the April 20 rig explosion in the Gulf of Mexico.
BP owns just a fraction of the more than 11,000 stations across the U.S. that sell its fuel under the BP, Amoco and ARCO banners. Most are owned by local businessmen whose primary connection to the oil company is the logo and a contract to buy gasoline.
Distributors would still be free to sue BP and seek compensation from the $20 billion compensation fund if they choose, Kleine said.
BP spokesman Scott Dean confirmed in an e-mail to the AP that the package includes volume allowances and reductions in credit card fees that merchants pay when customers use their credit cards to buy gasoline and items in station stores.
"Teams of BP staff are also being deployed to help these independent businesspeople activate consumer loyalty programs at their sites to help retain consumers and to educate them on BP's response plan in the Gulf of Mexico," Dean said. "BP will continue to evaluate the programs and offers as the situation and environment evolves."
Dean added that BP is rolling out a marketing and advertising package that includes "Locally Owned, Locally Operated" media and marketing support such as point of purchase signage, radio, flyers, posters and postcards.
As to the compensation fund, BP spokeswoman Debra Reed said previously that the overseer of the fund has stated that anyone is welcome to file a claim.
Whether or not it is valid is up to the administrator.
Kleine said the 475 BP distributors in the U.S., many of whom own or operate BP-branded gas stations, were being notified directly by the company. Calls began Monday and would likely continue through Wednesday, Kleine said.
The cash will be used by the distributors how they see fit, according to Kleine, who said the money could result in discounts to consumers at BP-branded pumps. Some distributors may use the money to bolster their bottom lines, which have been affected because of the boycotts.
"There's a lot of variance in terms of the business effect of this incident," Kleine said. "To try to manage this nationally, it's just too big of an elephant. They recognized that the people that have the best knowledge and can apply the resources best are the local distributors."