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badice.com ~ musings for the masses

The BP oil disaster has been on everyone’s mind lately and for good reason. We won’t know the full affect on the region for months or maybe years and the spill is another haphazard mistake from BP, the last one being the Texas City refinery explosion. I know BP will clean up the mess, it’s their responsibility (though the federal government by law has a responsibility as well), what bothers me is the chatter on the internet and television about boycotting British Petroleum.

I saw these two things this morning and decided that something, no matter how little audience I get, needed to be written. There seems to be a large misunderstanding of how the industry operates and how people are able to pump gasoline into their cars each and every day. I aim to clear that up, if only by a little bit.

First, it needs to be known that oil is traded and sold at a very fast pace all day long. Because of this, refineries share crude oil, or feedstock. This type of sharing allows the refineries to be constantly supplied and making end products. Some refineries only make more feedstocks, usually for chemical plants. Others produce gasoline and diesel fuel and chemicals. The gasoline that is produced is moved to terminals that are located all over the country in strategic places. These terminals are privately owned and are essentially holding facilities for gasoline. There is no segregation of brand at these facilities, just stockpiles of fuel.

The local gas stations then send their trucks to the terminal to buy a load of fuel for sale at their station. En-route to the gas station the truck driver may mix an additive to the fuel depending on what brand it is being sold under (Chevron, Shell, etc.) and then pump the fuel into the underground tanks at the station. What you end up with is the exact same gasoline at every station, minus the additives. There is no discernible way to know where your gasoline came from. Even though a gas station has a BP logo, Shell may have been the one to refine the oil.

The same essentially goes for other oil based products.

What is the point in all of this? Well, the idea that one can boycott BP and make it go under is based on the false premise that one can distinguish BP gasoline from any other. In all of this, people are looking for someone to blame, to make pay and they’ve understandably gone after BP. However, at the same time, these same people could actually be making a difference by volunteering to help clean birds or scoop up crude. But, I guess it’s easier to attempt to boycott something that is near impossible to boycott rather than actually doing something.

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  1. Scott #
    May 28, 2010

    I like the article, but i’m not sure I agree with your conclusion. Profit at an integrated oil company comes from thee areas: upstream (e.g. drilling), downstream(e.g, convering crude oil to rinished products), and retail ( e.g. gas stations). When you boycot BP stations, you do impact BP at retail. Don’t discount the income from retail as being minor.

  2. Barbara #
    May 30, 2010

    I think a lot of people would volunteer to clean up, but unfortunately it is nearly impossible for many who live nowhere near the spill to do so. Yet, we can make a difference by boycotting, but boycotting one company doesn’t go far enough. Until people change the habits of greed and materialism, things like this in all forms will continue. If folks really want to consider changing the destruction of this planet in the long term and want to stop pollution, maybe we should first start looking at the landfills we create.

    • May 30, 2010

      Except there always has been and always be greed. We understand a little about why this spill happened but until we know everything about it, we can’t really say whether or not greed and materialism are what caused this disaster.

      My point in writing this up was to point out to people that boycotting BP retail outlets does little to the big company and more to the independent operators of the gas stations. Retail is not a huge business for any of the major oil companies, exploration and production is the moneymaker, especially when the price of a barrel goes up. Downstream is the moneymaker when the price drops and more product can be refined. Retail, is just there. Sure it makes some cash but is not the focal point for the oil industry.

      Lastly, I think we can start by being upfront with one another and talking honestly about the real impact of humans on the earth and what is “natural” what isn’t rather than listing Al Gore talking points to one another.

  3. FS #
    June 1, 2010

    I disagree with most of this article.

    1.If each gas station had exactly the same gas, I doubt this site would exist: http://www.toptiergas.com/ with BMW, General Motors, Honda, Toyota, Volkswagen and Audi backing it.

    2. I understand where a lot of people are coming from when they say that boycotting is effectively useless but think they’re missing the whole picture.

    2a. One point that people who say boycotting BP is useless fails to see the fact that people’s attention are once again pulled in the direction of a big oil company. Indeed, this doesn’t make only bp greedy… It doesn’t make bp the only company that compared their employees to the three little pigs vs. how much money they should spend on safety for them. It shows Americans and the world that all energy companies, especially oil, are only after our money. After all, what else can they be after? They can have no other goal.

    3. Another thing: Anyone who says that gas station owners make any reasonable amount of money from GAS has not been informed very well. Most money goes to the oil companies/gas station brand, whereas only 2 cents or so gets passed on to the gas station owner. There have been plenty of articles talking about how credit cards have cut into profits of gas stations because it keeps people at the pump instead of coming inside and buying marked up fattening snacks and soda pop. Another reason to avoid all gas station insides and not just bp.

    OK, now I’m just ranting, but the main point:

    4. Boycotting bp is a good thing. It shows bp and other oil companies that people won’t put up with this crap. Their share prices have lost $70 billion of their capital so far, and don’t tell me that 0.00% of that can be attributed to the fact that people are saying BOYCOTT BP. It will make a difference; everything that people do makes a difference, and if some people are inevitably hurt, so be it. The environment, in the short and long term, is, in my opinion, more important than some people making less income because they chose to partner with a company that couldn’t spend a little more to buy a decent BOP (blowout preventer) and couldn’t spend a little more on drilling fluid for a few minutes is an unfortunate victim of their industry and employer(s).

    I’m 100% behind boycotting bp. If any other company disrespects the environment, I will stand behind boycotting that company, too, even if I’m left with only one company that charges the most within 25 miles of me because they were greedy and didn’t care about the earth that’s fed their executives so well.

    • June 2, 2010

      FS, thanks for the comment. I’m sorry you disagree but this write-up by me is based on my experience in the industry. I’ll post my reply to each of your points.

      1. Your link actually proves that each gas station has exactly the same gas. If you read what is posted there you would have seen that the product is actually a detergent that is added to the gasoline before being put in the tanks underneath gas stations. So, like I said in my article, nothing happens to the gasoline between the refineries and the distribution points, it’s all of the same product. After the distribution points, different companies usually combine the fuel with additives, in this case, one that improves the EPA rating. It does not actually change the gasoline, it merely gives it an EPA boost.

      2a. Sure, it does draw attention to BP and there are areas where boycotting would be effective, the most notable is motor oil, a product that is marketed purely by the oil company. It comes straight from the refineries to be bottled so you know it’s their product.

      3. No one has said that gas station owners make a lot of money from gas but your reasoning why is flawed. The major brands of gasoline are licensed to independent owners who then buy gasoline from distribution points (also independently owned). This is where a lot of fluctuation in gas prices comes from, not the actual price of a barrel of oil (though it plays a part). You are correct though, gas station owners on average make $.02/gallon and boycotting the brand stations hurts no one except that station’s owner. Like I said in other comments, retail is not a big part of the oil industry but it is a necessary one. If the retail industry was to falter for BP, they would still refine oil and sell it to distribution points, they just wouldn’t have branded stores.

      4. I actually highly doubt the stock price fluctuations are due to people boycotting BP. My guess is that it is more tied with people being hesitant to hold on to company’s stock when that company might be sued by the federal government. Also, you’ll notice, this morning BP’s stock price rebounded, even as it’s European counterpart fell. If people are going to boycott BP, that’s their prerogative, it just does not have the negative impact to the company that people think it does. Sure, marketing wise, it will hurt them but they’ll continue to do business behind the scenes (where the real money is made) by drilling, refining, and making chemicals. If folks want to successfully boycott BP in a meaningful way, they should probably drop off the grid and live off the land. Even “green” energy requires oil (used to make plastics for solar panels, etc.).

      In closing, please read this brochure from the EIA (Energy Information Administration) about where gasoline comes from.

  4. susie #
    June 5, 2010

    The sad situation about all this is that the media, federal gov, and oil officials will tell you what they think will get your attention. First of all it is not proven BP created the spill considering trans ocean owned the rig, halleburton employees were controlling the rig for the BP well, also who built the valve ? To the best of my knowledge it has not 100% been proven what happened. Everyone is forgetting the lives that were lost (thank God only 11) yes we wish NONE. The only reason BP is being attacked is because they are the big ones to step up to the plate to clean up the problem, because they are acknowledging that they own the well, where are the other 2 company’s that are associated with the disaster. Yes I’m sorry it happened but do we stop buying cars because wrecks occur.

  5. John #
    June 6, 2010

    When you boycott a BP station, you hurt BP very little. They still sell the crude. Who you hurt is the person who owns the franchised BP Station, not BP. Yes, a certain portion of their profits go to BP to be able to carry the BP brand name, but that is pittance compared to what BP makes on the crude.
    Stephan is correct in everything he says, except I don’t believe the drivers put in the additives. They are put in at the refineries at the time of pumping into the delivery truck. The additives are about the only thing that make a gasoline brand specific.
    For years I have watched people pull into gas stations with way higher prices and even buying Premium fuel when their car only requires regular. People know squat about gasoline.
    Octane is no more than a detonation deterent. It does not denote a fuel quality as many people are led to believe. In other words a higher octane fuel burns slower and actually less complete in cars that can handle regular. Mileage can be affected negatively and putting Premium in your car once and a while does nothing to clean your engine as many people think.
    I always buy the cheapest gas I can find in my travels and have yet to have a negative effect in my 47 years of driving. Even on a steady driving trip, regular will work fine in a car that requires premium. Listen for a pinging in the engine ,, that’s detonation.. learn not to apply full power load and it won’t happen. Yes, detonation is bad, but not if you avoid it by learning how to drive.
    If you are a lead foot and can’t control yourself and have a car that requires premium, buy premium….. and on subject,,, boycotting BP is just plain stupid..

    • June 6, 2010

      John, thanks for the comment.

      The drivers are legally obligated not to tamper with the gasoline between the refineries and the terminal distribution points. If they mix the additives before getting to the terminal then the gasolines will not be chemical matches and the distribution point must reject it.

      All additives or detergents must be added between the terminal and the gas station. This is the whole reason the gas you receive at one station is technically the same as what you’d receive at another, it came from a terminal that received gasoline from a bunch of refineries and stored them for delivery.

  6. iJapanesey #
    June 12, 2010

    Thank you for posting this article and opening the eyes to education rather than the band wagon effect. It’s so easy for people to drive to their local gas station and fill up, not knowing how it got there to begin with.

    Boycotting BP solves nothing and they’ll still be producing oil years down the road. If you boycott BP, you’d essentially have to boycott all 3 major oil companies because of the damage they have done to our people and environment. Know your history before jumping on the propaganda wagon!

  7. Todd #
    June 17, 2010

    Hahahahahahahahaha, ya’ll are all blind! Boycott don’t boycott? Whatever! Oil should be used only for all other products that do not require burning them! ie. no more gas period! That means scaling down the oil industry and making way for the future RIGHT NOW! Gooooooo lithium and hydrogen!!

  8. Todd #
    June 17, 2010

    or any other kind of fuel produced from oil! just in case ya’ll are snipity and notice i only mentioned gas.

  9. John #
    July 11, 2010

    BP stations do pay a monthly franchise fee to BP so it does hurt BP.

    From here:
    http://www.ampm.com/sectiongenericarticle.do?categoryId=9006398&contentId=7013207

    What is the Monthly Royalty Fee?
    The royalty fee is 5% of gross sales, excluding gasoline and sales tax and including lottery commissions.

    What are the Required Advertising and Promotion Fees a Franchisee Must Pay?
    The advertising and promotions fee is 5.5% of gross sales, excluding gasoline and sales tax and including lottery commissions. If the franchisee participates in all Required Programs during a calendar month then BP will rebate an amount equal to 2% of the Gross sales during that month.”

    Advertising and promotional fees are spent by BP at our sole discretion for advertising and promoting the ampm brand, aimed at building customer awareness and driving continued business to the ampm facilities.

    • July 12, 2010

      Yes, I understand that they pay a monthly fee, but it’s not from gasoline, it’s just to keep operating with the BP logo. Even by boycotting these stations you’re still mainly hurting the station owner and only touching the tip of the iceberg when it comes to the “big bad corporation”.

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