BP Boycott is a Nutty Idea

By John Ballard

A quick search will return scads of links calling for a boycott of BP. They are popping up like mushrooms after a summer rain. Except for sex, righteous indignation is the most compelling of all human drives. I watched it for years serving the public. Indignation does little to resolve problems but it sure feels good.

Sometimes boycotts are a good idea. The Montgomery bus boycott and years of sanctions (another word for boycott) of South Africa are historic examples. A boycott of Shell Oil in 1995 succeeded when aimed at a specific action which the company took within days.

But BP is a global giant and has been for decades. Last night's PBS News Hour put up this discussion worth watching. Listen for these tidbits:

Well, clearly, it's been hurt financially. Half the stock market value is gone, although, from the standpoint of assets and cash flow, it still has, you know, quite a bit of life into it.

And for as much as people in the U.S. are thinking this is a British company, this is really an American company as well. Out of 80,000 worldwide employees, over 30,000 are in the U.S. Of the stock market ownership, about 40 percent of BP shares are owned ...within the U.S.

BP is the largest oil producer in Alaska. It is half owner of the Alaska pipeline. It's the largest oil producer in the Gulf of Mexico. Globally, BP produces over four million barrels of oil equivalent per day, which is about 5 percent of the total global world oil output.

It's the largest supplier of liquid fuels to the U.S. Department of Defense. So, we have to be very careful about, you know, doing things to BP that -- that will disrupt all of this in a way that can turn an environmental catastrophe into an economic and energy catastrophe, not just for the U.S., but worldwide.

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...based on the raw numbers, what it owns, what it does, how much cash flow it has, BP can afford financially to survive this disaster.

If the politics become very, very ugly -- and we have heard sounds of, oh, we should seize their assets, we should break them up, we should put them in receivership, you know, then -- then -- then things are off. You know, and who knows what would happen to those assets?

I mean, the Alaska pipeline that BP owns half of could wind up being the China pipeline....Prudhoe Bay could get sold to the Russians....there's all sorts of things that we can do that would ...disrupt the energy economy of the United States.

Sounds a lot like blackmail, no?

Or TOO BIG TO FAIL? Where have we heard that before?

Ron Leiber at the New York Times risks life, limb and getting ostracized by his peers with this brave little blurb yesterday, The Misdirected BP Boycott.

In this week�s �Your Money� column, I spot an oddity in the conversation about how we all ought to react to the oil spill in the Gulf of Mexico: Greenpeace doesn�t think you should boycott BP.

How can that be? The gasoline business is complicated. Fuel at a BP station may come from a different company entirely, with the BP additives mixed in to the gasoline only at the very last moment before it�s trucked to the highway rest stop.

Meanwhile, if you pass by a BP station and burn some fossil fuels driving down the road to fill up elsewhere, you may end up at a retailer that gets all of its gasoline from BP. The retailer won�t tell you that though. (Some of them wouldn�t tell me either, as you�ll see in the column. Hi Kroger! Paging Costco executives!!) And the people who work at the gas station probably don�t know either.

Boycotting is easy. That�s why so many people like to do it. Lowering demand for fuel, thereby delivering a true blow to big oil for those who are so inclined, is much harder. It requires sacrifice. Colder homes and offices. Driving more slowly. Buying a smaller car. Avoiding or delaying a move to the suburbs that necessitates more hours behind the wheel.

You can piss on BP's shoes all you want and it won't bother them at all. In the linked column find this...

Greenpeace has chosen not to call for a boycott. Instead, its representatives pose a different challenge: people who really want to punish BP ought to try getting Beyond Petroleum themselves.

BP doesn�t have much use for the service station business anymore. In 2007, it announced plans to sell the last 700 stations that it hadn�t already sold to franchisees. The company chose to focus on finding and collecting oil.

Once companies make a discovery, it comes out of the ground and ends up at a refinery. There, it can be mixed with oil that a variety of companies have poured into the tanks.

Then, the gasoline makes at least one stop at what is essentially a wholesale warehouse. BP owns some of these tank farms, but so do other companies.

See what I mean? You may as well call for a boycott of heroine or cocaine. The farmers in Afghanistan and South America aren't the problem. In reality, neither are the drug traffickers. WE ARE THE PROBLEM. Ron's excellent post last week underscored the point.

Chris Kromm at Facing South took a long hard look at the notion of Boycotting BP driving the home the point that it's an idea not worth pursuing.

According to one national poll, 51% are ready to boycott BP gas, and websites and Facebook pages (549,000+ fans) calling on consumers to stop buying from the oil giant abound.

For some, it's a moral decision: They don't want their gas dollars going to a corporation they view as irresponsible or worse. For others, a BP boycott is viewed more strategically -- a way to hit BP where it'll hurt most, the pocketbook, and force them to change their ways.

But will a BP boycott really work? It's a question I've thought about for years: When I worked for the Student Environmental Action Coalition in the early 1990s, we launched a boycott against BP due to a host of ecological ills we felt they were inflicting on the world (let's just say that even then, their environmental track record was less than stellar).

We were righteous. We were determined. SEAC members even got a meeting with higher-ups at BP America's corporate offices, where we boldly declared that unless BP changed their ways, our members -- a few thousand students around the country -- weren't going to buy their gas anymore.

I can only imagine what the BP suits were thinking as they tried to contain their laughter: "A few college tree-huggers (who probably don't have cars anyway) won't buy our gas? Ooh, we're so scared." If "whatever" had been popular lingo back then, they might have said it.

Needless to say, we didn't win any major concessions from BP. Our hearts were in the right place, but we misjudged the power dynamics at hand: Simply, our band of student environmentals didn't have the power to influence BP through a boycott.

It's a good column. Go read the rest.
Don't say it too loud, but here is this week's financial reality.

One place BP clearly is feeling pain is in its stock prices, which were down 16% by the close of business yesterday. Since Deepwater Horizon exploded, BP has lost half of its market value -- a staggering $95 billion.

Which points to the final way boycotts can influence a company: Bad publicity, which can spook investors. While many BP shareholders are likely fleeing due to the growing costs of the spill -- with more claims and lawsuits on the way -- its also due to public disgust and the perception that BP is a "damaged brand," something a boycott helps fuel.

This shift in public perception can also help fuel efforts to have institutional investors, from business pension funds to college endowments, to dump their BP stocks -- a strategy that proved successful in the U.S. movement against South African apartheid in the 1980s and 90s.

See that part about "lost half of its market value"? If you have no investments it won't bother you much. But mutual funds, pension plans, and other places that assets are kept all felt the pinch. Fund managers everywhere had a flashback of November, 2008 and gasped... Is this another one of those oh-shit moments? 

I'm not an expert but I'm also not stupid. If I were a fund manager I would be looking for quiet little ways to balance my portfolio to have less BP stock. The train wreck in the Gulf of Mexico and the birds of prey in the media are taking the place of a boycott. The way to get back at BP is to support alternative ways to energy. The renewable resources mantra is no longer just for tree-huggers.