Will BP Gas Stations In America Be Amoco Soon?

People who drive by many BP plc (NYSE: BP) gas stations in the US throw rocks at them, which has become an expensive problem for the owners of the locations. The even larger issue is that drivers do not come in to fill their cars up with gas at the stations any more.

The Telegraph reports that the issue is also significant in Germany that BP may sell its stations there to Aral, which already has a good brand in the European nation, for 2 billion pounds.

BP stations owners in the US are not likely to be helped by a white knight which can put another brand on their pumps. Large oil companies like Exxon Mobil (NYSE: XOM) do not need another few thousand stations.

The quickest and perhaps least expensive way out of the fix that BP station owners find themselves in it to take on an old and well-regarded brand. Amoco was a brand under which many stations operated for decades. BP, which bough Amoco’s parent, re-branded the stations to BP over time. Station owners are tempted to move back to the former name as quickly as possible, and probably will do so to save their businesses. BP is under siege enough that it is hardly in a position to resist, and the only moral thing to do is allow the local franchises a chance to remain in operation.

The gas station name issue is a lesson in brand values. BP, formerly known at British Petroleum, shortened its name so that investors and consumers would not look at it as an oild company based in London run by English citizens. Not may people were likely to have fooled. BP then went about changing name of all its US operations to the brand of the parent company as well. Very few drivers knew what the BP logo meant, so the change from a revered brand like Amoco did not make any sense in the first place.

BP suffered from a syndrome that many large multinational firms do. They believed that if the world of millions of consumers do not know the name of the parent company that somehow the firm’s value is undermined. The opposite is actually true. Re-branding can be expensive, particularly if the brand which is washed away has a great deal of equity built up over a number of year.

BP should have kept the Amoco name on its stations. It would have helped everyone from the BP home office, to the station owners and consumers.

Douglas A. McIntyre