I have been following the BP disaster in the Gulf quite closely and have been especially observant regarding the business and economic ramifications of the event and I feel I have a solution to the revenue problem being realized by station owners. I will be the first to say that a boycott against BP branded gas stations is a childish solution to the problem at hand. The minimum wage employees of BP gas stations all across the country are being harassed verbally and physically threatened because of their affiliation with the oil giant. These stations are typically owned locally or regionally and the only connection they have to BP is the gas in their underground tanks.
While I am on the subject of boycotting BP, it should be realized that as one of the world’s largest producers of crude oil, they supply the raw materials for making plastics, food preservatives, dyes, carpet, DVD’s and more. So, just because you boycott a BP branded gas station, doesn’t mean you aren’t consuming a product utilizing their crude oil.

BP recently announced a rebate program to compensate its distributors 1-2 cents per gallon of fuel purchased going back to the date of the rig explosion. This compensation is meant to alleviate the sales declines suffered by these distributors from the nationwide BP boycotts. But the question remains, will this money trickle down to the station owners and/or consumers? I think not.

Gas station owners derive a good portion of their revenue and virtually all profit from the sale of items inside their stores and make little to no markup on the gasoline. Many BP station owners are reporting revenue declines of 10-40% because people who would ordinarily fill up (and grab a coffee or snack inside) are patronizing alternate gas stations. The solution that BP should be attempting is getting people back into the stores to purchase those convenience items that the station owners depend on to stay in business.

My solution: BP needs to begin a loyalty/rewards program for consumers that offers a rebate on every gallon of fuel purchased. This way the discount is not reflected on the price advertised at the street corner so that competitors will not just match the discount. BP could require you to signup for an account and give a membership card that will then entitle you to a 3 to 5 cent per gallon discount on fuel. This discount could be given directly at the pump in the form of a lower price after swiping your membership card, or in the form of a reward sent to you in the mail after you reach a certain rebate threshold.

By offering an incentive such as this, BP stations would see a dramatic rise in business not only at the pump but inside their convenience stores as well. In desperate economic times such as this, many people will choose a BP station to save a nickel per gallon despite what’s going on in the Gulf. This would also go a long way in repairing the PR nightmare that BP has been experiencing over the last couple months. The cost to BP would be minimal considering the larger positive impact it will have on their stations’ business, thus increasing BP’s overall franchise royalty revenue.

[tags]boycott, bp, oil spill, rebate[/tags]