Will it really work to boycott BP?

NOTE: A version of this piece also appeared at The Huffington Post -- check it out here.

In the eight weeks since oil began gushing into the Gulf of Mexico's from BP's ill-fated Deepwater Horizon rig, growing numbers have come to the conclusion that the only response is to stop buying BP gas -- a boycott.

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 cleaned up their act, 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.

That lesson about power is at the heart of talk about a BP boycott today: It's fine to boycott BP for moral reasons, but can it really cause BP to change?

BOYCOTT ECONOMICS 101

Today's economists tend to write off the ability of consumer boycotts to do serious damage to a company's bottom line -- especially big multi-national companies like BP. Success stories from history like Rosa Parks and the Montgomery Bus Boycott worked because they hit a small, local market that immediately felt the impact when 90% of African-American bus riders refused to pay fares until the back-of-the-bus policy changed.

But as media has grown global and viral, that might also be increasing the ability of boycotters to swing enough consumers into action. For example, in a 2006 study, Stanford economists Larry Chavis and Phillip Leslie looked at the "boycott French wine" campaign organized by right-wingers upset with France's opposition to the Iraq war. The boycott enjoyed prime-time TV  and front-page newspaper coverage (crucial to their success, the authors say).

The result? U.S. sales of French wine dropped 26% at the height of the boycott.

Still, global oil markets are a lot different than buses and wine. The latter involve smaller and more specific markets. It's easier to choose another wine bottle off the shelf at a grocery store than drive across town to another gas station.

And given that, before the spill, BP took in $93 million in profits a day -- and CEO Tony Hayward made $6 million in yearly salary -- it would take lots of lost sales to register on BP's bottom line.

Boycotting an "oil major" is also more complex. As many local BP gas stations have pointed out, they're only franchising the BP name. While declining sales at local stations does send a message to BP headquarters, much of the impact is felt by the local business. One could argue this is one of the risks a gas station owner is taking when they decide to open a BP affiliate, but there will always be sympathy for the mom-and-pop businesses affected.

Because oil companies both supply and sell gas, there's also the problem that you never know when you're buying BP products. The governing board of Bee County, Texas made headlines in 2006 when they called for a boycott of ExxonMobil gas in response to rising gas prices. The problem? There was no guarantee that other local gas stations wouldn't start selling ExxonMobil's gas to keep up with demand.

Same with BP: As Atlanta-based businessman Russ Scaramella -- who bought 32 BP stations a month before the Deepwater Horizon debacle -- pointed out:

If you stop coming to me, you're probably buying BP gas somewhere else and you just don't know it because it doesn't say it on the sign.

And at the end of the day, how much better are the other big oil companies?

A KEY INGREDIENT: CLEAR DEMANDS

All of that said, we know that a boycott of an oil major can work -- it has already. When Greenpeace called for a boycott of Shell in 1995 over the company's decision to dump the Brent Spar oil platform at the bottom of the Atlantic, sales plummeted by 70% in some countries. Shell changed its decision within days.

But the Shell boycott had another key ingredient for success: clear demands. Greenpeace -- and boycotting consumers -- called on Shell to take a specific action, which they could carry out.

What are those boycotting BP asking for? Public Citizen's "Boycott BP" petition doesn't lay out any demands. The boycottbp.org website says it will keep the boycott going until:

...until all legal disputes are settled and paid in full.

...until reparations to those who lost work or income are paid in full.

...until government assistance is repaid in full with interest.

...until a solid, meaningful testing plan to avoid this type of disaster is developed, implemented, and published.

One can agree with all of those positions and still realize it's an unwieldy list -- and the boycott organizers are unlikely to ever declare victory.

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.

But in the South Africa case, the target (the South African government) and the demand (ending apartheid) were clear. Right now, BP is taking an economic beating -- but it would have much more impact of consumers and investors united to say, "We will only buy from and invest in your company once you do X, Y and Z." Otherwise, BP goes down and the Gulf will get nothing.

So back to the original question: Can a BP boycott work? If it's about the morality of your personal buying decisions, that's up to you. But it can also succeed if the goal is changing BP's corporate behavior -- but only if it has broad reach, focused targets and clear demands.

Only by learning these lessons of boycott history can consumers and investors turn their anger into something that can really help the people and environment of the Gulf.