26-June-2010Published in: St. Louis Post Dispatch
Author: Matthew Hathaway
Consumers can change the world simply by not buying — but boycotts don't always work that way.
Twenty years ago, South Africa was in the throes of cultural and economic isolation largely because consumers vowed to punish any companies doing business with the apartheid state. That international boycott is credited with helping bring down the country's racist system, and today a transformed South Africa is the focus of international sports as host of the World Cup.
If South Africa is the best example of just how mighty a consumer boycott can be, the campaign to punish BP might be its opposite - an ineffective response to the Gulf of Mexico oil spill that will most harshly affect small-business owners who had nothing to do with the disaster.
Yet this week, the Facebook page Boycott BP gained its 700,000th supporter.
And, in the real world, plenty of St. Louis consumers have stopped buying from BP stations, said Tracey Hughes, a spokeswoman for Wallis Cos. of Cuba, Mo., a distributor of gasoline to about 60 area BP stations.
"Everybody is feeling the impact, although there are pockets where the consumer backlash is stronger," said Hughes, who said some stations have reported double-digit declines in sales recently.
On Thursday, in a commentary published in USA Today, Public Citizen President Robert Weissman renewed that group's call for consumers to avoid BP stations for at least three months.
Innocents will suffer from a boycott, Weissman acknowledged, but "that can't be reason for consumers to forfeit their collective power to influence or punish bad-actor companies."
For a consumer boycott to work, business must feel its sting, either from lost sales or tarnished reputations, and they need to have a clear path to winning customers back. The apartheid-era boycott worked because it met both these criteria; the BP boycott does not, said Benjamin Ola Akande, the dean of Webster University's George Herbert Walker School of Business and Technology and an expert in energy economics.
Boycotting gas stations flagged with the BP brand is, at most, a symbolic act that will have an insignificant impact on the company's bottom line, Akande said.
That's because BP owns fewer than 200 of about 11,000 stations bearing its logo. Those stations are owned by independent operators, and the gas they sell may or may not have been drilled by BP.
The oil giant does make money from these stations, but the company won't say how much. Industry experts have said that they believe it's insignificant and that the flagged stations' real value to BP are as platforms for corporate marketing.
Under a boycott, the flagged stations could become liabilities. They are the battlegrounds where boycotters can chip away at BP's cultivated public image, or at least that's the position of Public Citizen. In the long run, BP will suffer.
In the short term, the collateral damage of a boycott is overwhelmingly borne by independent operators who had no say in BP's drilling operations or gulf cleanup effort.
"If you're boycotting, you're missing your intended target," said Ronald Leone, executive director of the Missouri Petroleum Marketers and Convenience Store Association. "You're hurting local businessmen, their employees, the people they buy products from ... even the Little League teams they sponsor."
To make any BP boycott even more difficult, the company makes plenty of money from stations not bearing the BP logo.
For instance, angry consumers could end up skipping BP-flagged stations that, in fact, are selling fuel that was drilled by other firms and taking their business to another chain — or a non-branded service station — only to fill up their tanks with petroleum that was drilled, transported and sold by BP.
Patrick Welch, an economics professor at St. Louis University, compares the BP boycott with car buyers shying away from Toyota after that company's recall of more than 8 million vehicles because of unintended acceleration problems.
Toyota must respond to consumers' concerns because it has no other choice. The automaker can't simply sell its inventory to a competitor. But because BP has that option, "it can, to a large degree if not completely, dodge the bullet of a boycott," Welch said.
"Let's assume a boycott works, it ultimately isn't going to hurt BP corporate because they'll just sell their crude on the open market," he said. "It's not like the product isn't going to be sold."