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BP to Bail Out Own-Brand Name Gas Stations

Oil giant BP is floating a financial lifeline to the owners, operators and suppliers of the gas stations around America that bear its name and have been struggling because of boycotts prompted by the Gulf spill.

BP sign seen in Jackson, Missouri.
Getty Images
BP sign seen in Jackson, Missouri.

The head of a trade group that represents distributors of BP gasoline in the U.S. told The Associated Press on Tuesday that the company is informing outlets that they will be getting cash in their pockets, reductions in credit card fees and help with more national advertising.

The cash component will be based on distributors' volume and will be higher for outlets along the Gulf Coast than for those elsewhere in the country, said John Kleine of the BP Amoco Marketers Association.

"They are going to get a check," Kleine said. "They're being given these dollars for use in their business." He estimates the total package BP is offering at roughly $50 million to $70 million.

Some BP-branded gas stations have reported sales declines of 10 percent to 40 percent from Florida to Illinois since the April 20 rig explosion in the Gulf of Mexico.

BP owns just a fraction of the more than 11,000 stations across the U.S. that sell its fuel under the BP, Amoco and ARCO banners. Most are owned by local businessmen whose primary connection to the oil company is the logo and a contract to buy gasoline.

Distributors would still be free to sue BP and seek compensation from the $20 billion compensation fundif they choose, Kleine said.

BP spokesman Scott Dean did not dispute Kleine's comments. He said the company was preparing a statement.

As to the compensation fund, BP spokeswoman Debra Reed said previously that the overseer of the fund has stated that anyone is welcome to file a claim.

Whether or not it is valid is up to the administrator.

Kleine said the 475 BP distributors in the U.S., many of whom own or operate BP-branded gas stations, were being notified directly by the company. Calls began Monday and would likely continue through Wednesday, Kleine said.

The cash will be used by the distributors how they see fit, according to Kleine, who said the money could result in discounts to consumers at BP-branded pumps. Some distributors may use the money to bolster their bottom lines, which have been affected because of the boycotts.

"There's a lot of variance in terms of the business effect of this incident," Kleine said. "To try to manage this nationally, it's just too big of an elephant. They recognized that the people that have the best knowledge and can apply the resources best are the local distributors."