I find it interesting, this call for boycotting that has arisen so often lately; the current focus of punishment is, of course, British Petroleum. In the spirit of full disclosure and credentials, for those that do not know my background, I was in the oil and gas exploration business for 30 years. However, I ran a very small family business that BP, or any other major energy company, could and would squish without even noticing our extinction. So while there is no love loss on my part for a mammoth oil company, I do understand most aspect of the hydrocarbon energy business and I feel I can bring some unbiased thoughts to the situation.
First, I would ask if those of you calling for or actually boycotting BP, have you done any research on whom it will affect, do you know the extent of ramifications, and if, indeed, BP will be hurt? BP has been in the US for over 50 years and is now the biggest producer in the US, having bought out several other companies, but let’s dissect their business.
BP spent over $50 billion in the last 10 years and some would argue that this is just to further their profits. But all that money didn’t just vanish, it ultimately goes to people somewhere down the line. They directly paid salaries for their some 23,000 employees, rented office space and rigs, and purchased oil field and refinery equipment. Indirectly, they paid the salaries of the rig crews and those that built the rigs and refineries, and oil field service and support workers. Further, they paid royalties to federal and state government and to individual property owners, dividends to their stockholders, and some of that money going to pay federal, state, and county taxes.
If the boycott is wildly successful, BP might lose 2% of its global income, but are those at the top really going to see a reduction in their benefit packages? I doubt it. If they are impacted by the boycott, BP may lay off lower level workers, they may rent fewer rigs, and may buy less equipment and supplies. However, I bet they simply cut back on their investment in solar, wind, and bio-fuels, which historically have a lower profit margin. Also, when I hear most people talk about corporations, they seem to think they are an entity unto themselves and their only mission is to make as much money as possible. Legally they are considered a single unit but, notwithstanding what I consider to be obscene salaries at the top, they are owned by regular folks. This is either through direct stock ownership or through market or pension funds. I would bet that investors and pensioners too will lose money before any executive has his or her salary cut.
So how will the boycott manifest and who really gets hurt in a typical boycott these days? About the only way for the public to participate in a boycott will be to stop buying BP’s gasoline. While BP is one of the largest gasoline marketers in the US with almost 12,000 gas stations, do the boycotters know that BP does not actually own any of these stations? They are owned by small entrepreneurs, may of whom are moms and pops that saved up their money to get a piece of the American dream by owning their own business. Ultimately, yes BP does get a few cents on the dollar from every gallon sold, but if a station closes, it is the owners and their 2 – 4 local employees that lose jobs. The state and county loses the taxes no longer paid. Local owners of McDonald, Dominos, and Blockbuster lose business as those out of a job cut back. Hotel owners and others where those now unemployed would have vacationed lose income. Get the picture?
However, I will bet that BP actually does not lose 1¢ in even a “successful” boycott. That is because gasoline supplies remain fairly tight. I find that people are generally very unknowledgeable of almost every aspect of the oil and gas business. If a non-owned BP station closes, corporate BP will simply sell the gasoline that would have been allocated to that station to another company, either through their local distributer or right from the refinery. However, BP wouldn’t probably even have to do that as, unbelievably, there are people boycotting BP stations and, instead, they are buying their gasoline from Amaco and ARCO, both owned by BP!
And this boycott is not really atypical. There was a call to boycott Whole Foods last year after its owner, John Mackey, had, what some deemed, the audacity to propose an alternative to what is now called Obama Care before it was passed. Once again, I found not a single person that knew that Mackey did not receive a salary and hadn’t for many years. So who would have been hurt? Laid off store employees, local distributers, organic farmers, charities, and not-for-profits that Whole Foods support. Wow, talk about throwing out the baby with the bath water.
I understand the impotent feeling the public has over this abominable ecological disaster and the need to strike out. I totally agree that BP needs to be both held accountable and fined, but let’s let President Obama, Congress, state and local governments and regulatory agencies punish BP. If anything, we should be supporting our local BP station owners to help them in this time of recession, not heaping additional torment on them.