What’s the cost of sustainability?
I’m sitting at an intersection on March 31, the last day of the economy’s 2008 first quarter rollercoaster ride. On one corner is a Crown station selling regular unleaded gas for $3.23 a gallon, on another corner is Mobil selling a gallon for $3.24, still on another corner is BP with a gallon going for $3.27. I realize a few pennies per gallon are nothing huge but when all three stations are within spitting distance and equal convenience, I wondered what makes the cost difference?
I did a little research and found that Baltimore-based Crown Central Petroleum (the cheapest of the corner), owned refineries and convenience stores but fell on hard times and put all assets up for sale. A small oil company in North Carolina bought all Crown’s local properties.
Okay get this, I also found that very same small North Carolina oil company owns and operates both the Crown AND the BP station. The only difference between the highest (BP) and the lowest (Crown) is brand perception. Given their industry, I immediately see a corollary to sustainability communications.
Toronto-based socially responsible investing research firm Jantzi Research ranks 23 oil and gas companies on their social and environmental performance.
UK-based BP topped the list of high performers. No US-based oil company ranked higher than 12 th . The report states, “…top performers are dominated by European and Canadian companies, while all eight of the US companies evaluated for this report received below-average scores." ExxonMobil, the world’s richest company, securely holds down position 18.
ExxonMobil's environmental record has been a consistent target of critics, not only from outside organizations such as GreenPeace but also from institutional investors who disagree with its stance on global warming. On February 13, 2007, ExxonMobil CEO Rex W. Tillerson acknowledged that the planet was warming while carbon dioxide levels were increasing, but in the same speech said, "I'm no expert on biofuels . I don't know much about farming and I don't know much about moonshine. ... There is really nothing ExxonMobil can bring to that whole biofuels issue. We don't see a direct role for ourselves with today's technology."
A few days earlier on February 11, BP announced that they would spend $8 billion over ten years to research alternative methods of fuel, including natural gas, hydrogen, solar and wind.
So, BP (remember, that’s Beyond Petroleum) gets high marks for trying to be a solution to global warming. Given my little market research corner, do you think the higher gas costs are a brand premium, an investment in alternative energy or oil tycoon pocket padder?
Comments
The fourth possibility is that it's better gas that is more expensive to make, but we know that isn't the reason for the increased cost.
It could be the alternative fuels R&D costs being passed on to customers. Leave it to the petrol industry to charge their customers for their green efforts.
But I think that the brand premium is the winner. It seems to me that we are paying for how good we feel by using their products.
Ouch. A great question for the cynic in me.
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