Lukoil boycott takes off in Philly amid calls to ban all Russian oil imports
The Russian invasion has inspired a boycott of Lukoil stations, though many are owned by Americans, not Russians. Lawmakers move to ban all Russian oil imports.
Like many Americans, Patricia Ohlemiller was outraged by Russia’s invasion of Ukraine. In protest, she stopped refueling her vehicle last week at a gas station near her home, which sells fuel under the brand of the Russian oil company, Lukoil.
Ohlemiller, who lives in Erdenheim, said she always fueled up at the Lukoil out of convenience. “I AM NOW BOYCOTTING IT AND PRAYING EXTRA FOR THE UKRAINE each time I drive past it,” she said in a post on Nextdoor.com
The boycott and prayers are happening all over, and not just in the Montgomery County community where Ohlemiller lives. The Newark City Council on Wednesday voted unanimously to suspend Lukoil licenses in New Jersey’s largest city, a protest aimed at Russian President Vladimir Putin.
The hashtag #BoycottLukoil began trending immediately on social media after the Russian invasion on Feb. 24. Anti-Lukoil consumer boycotts have sprouted up in several European countries and in the northeastern United States, where most of the 230 U.S. Lukoil outlets are located, including dozens around Philadelphia. The boycott became part of an anti-Russian movement aimed at iconic products associated with Russia, such as vodka and caviar.
The trouble with the anti-Lukoil sentiment is that most of the stations are operated by American business owners under lease, said Jeff Lenard, vice president of strategic industry initiatives for the National Convenience Store Association. The American businesses become collateral damage in a geopolitical conflict.
“People are angry and people should be angry, but you’re not going to punish Russia to the level you think you are,” Lenard said. “Russians may own the Lukoil brand name and actually collect something from the sales at these various retail outlets, but the outlets themselves are really owned by independent business people.”
» RELATED STORY: Philly gas prices surpass $4 a gallon for the first time in 14 years
The Lukoil on Bethlehem Pike in Erdenheim is owned by a Bangladeshi American, said the cashier operating the store, also a Bangladeshi who declined to give his name.
“I love this country,” said the cashier. “Who is suffering from this? Just normal people like us.” The boycott did not seem to be particularly effective -- there were no protesters or pickets outside, and a steady stream of customers drove in to buy gas and cigarettes.
A spokesperson for Lukoil North America LLC could not be reached. Calls to its New York headquarters went unanswered.
The Lukoil board on Thursday issued a statement expressing its “deepest concerns about the tragic events in Ukraine” and its “sincere empathy for all victims who are affected by this tragedy.” The company said it supports “a lasting ceasefire and a settlement of problems through serious negotiations and diplomacy.” The company, which lists operations in 27 countries outside Russia, did not directly address the consumer boycotts.
Congress wants to hit Russian energy
There is growing pressure on the Biden administration to ratchet up pressure on the Russian energy sector, far beyond a boycott of convenience stores.
A bipartisan coalition of senators on Thursday introduced legislation to ban the importation of Russian crude oil, petroleum, petroleum products, liquefied natural gas (LNG), and coal.
Russia last year exported an average of 672,000 barrels of petroleum to the United States every day. The majority of the material were refined products, such as diesel, or intermediate products that require further processing at a refinery. About 199,000 barrels was crude oil destined for U.S. refineries.
Oil’s origin can be murky
Russian imports make up about 4% of the U.S. petroleum supply. Much of the imports are destined for West Coast refineries, mostly in Washington state. But a fair amount of material makes its way to the refining complex along the Delaware River and in northern New Jersey.
In November, about 5 million barrels of Russian petroleum were imported to Pennsylvania, New Jersey, and Delaware, according to the U.S. Energy Information Administration. That fell to 3 million barrels in December.
» READ MORE: Why some stations charge outlandish gas prices
The products included crude oil destined for the Monroe Energy refinery in Delaware County and the PBF refinery in Delaware City, Del. The imports also included 1.2 million barrels of “distillates,” such as diesel, and an assortment of unfinished oils and “motor gas blending components” that were imported primarily into northern New Jersey.
Once the oil makes it to U.S. shores, it becomes next to impossible to trace. Refineries typically source different types of crude oil and other components from a number of countries, depending upon what raw materials are available on the market. They are stored at the refineries and blended into a mix of refinery feedstock on any given day.
The diesel, gasoline, and other fuel manufactured by the refinery may be delivered to local markets through a network of pipelines and terminals. The fuel is held in common storage tanks until it is loaded onto trucks, when an additive mixture is blended into the fuel, which is the point that it becomes a branded product -- say, Lukoil gasoline.
“That’s the only point of differentiation of the fuel, and there’s no way to say with assurance the fuel is from a particular country,” said Lenard. “The gas in the tank of your car has a mix of different fuel blends.”
Russian oil may also make its way into the United States under a rebranded nationality in the form of fuels refined in other countries. The Netherlands, which imports Russian crude oil to supply its massive Rotterdam refining complex, is a large exporter of fuel to North America. Lukoil owns a stake in one of the Dutch refineries.
While boycotts may hurt individual gas station owners, they can also communicate public discontent. Independent Exxon fuel dealers suffered from consumer boycotts after the 1989 Exxon Valdez oil spill in Alaska, said Lenard. And BP station owners said they lost half their business after the 2010 Deepwater Horizon spill in the Gulf of Mexico. Lukoil stations were also the target of a boycott after Russia’s 2014 annexation of Crimea.
Lukoil, Russian’s second-largest oil company, was founded in 1991 during the dissolution of the Soviet Union to compete with Western oil companies. The state-owned enterprise became a private stockholder business in 1993. Conoco-Phillips, an American oil company, owned a 19% stake in Lukoil but sold its interest in 2011.
Lukoil made a big entry into the United States by acquiring Getty Petroleum Marketing in 2000 for $71 million, which included 1,300 retail outlets. Lukoil or its subsidiaries retains ownership of many of those outlets, which are operated under a variety of different brand names, including Lukoil.
Independent business people -- most of whom operate fewer than 10 stations -- lease the properties under long-term contracts with suppliers like Lukoil, said Lenard.
“Everybody looks at a different brand based on how it fits their business needs,” he said. “Do you get market intelligence? What type of marketing support do you get? Those are the things that people look at when they determine which brand to align with, and you can’t necessarily predict that there’s going to be a geopolitical problem later.”
Ohlemiller, who abandoned her Lukoil loyalty, has a little bit of regret. But she has friends with ties to Ukraine, and there’s more kinship in boycotting. She now drives a few blocks out of the way to refuel. Her new station: “Liberty Gas.”