How 30,000 Striking Steelworkers Could Affect U.S. Oil Production

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Workers are on strike at nine oil refineries and chemical plants around the United States in the largest such job action in 35 years.

Members of the United Steelworkers union (USW) who are employed by more than 200 U.S. oil terminals and pipelines as well as refineries and chemical plants went on strike at the nine facilities on February 1 after negotiations with several oil companies failed to end in an agreement on wages, safety and, benefits. The contract covers 30,000 hourly workers.

The negotiations began January 21, with a settlement deadline at midnight on January 31. The USW rejected five offers by the companies’ lead negotiator, Royal Dutch Shell, the Anglo-Dutch oil giant representing several large oil companies operating in the United States, including Chevron and Exxon Mobil.

“Shell refused to provide us with a counter-offer and left the bargaining table,” USW International President Leo Gerard said. “We had no choice but to give notice of a work stoppage.”

From Shell headquarters in The Hague, Netherlands, company spokesman Ray Fisher said Shell was eager to resume negotiations. “We remain committed to resolving our differences with USW at the negotiating table and hope to resume negotiations as early as possible,” he said.

Although picket lines were set up at nine of the companies’ facilities, only one has restricted production. But a walkout affecting all 200-plus facilities would stall up to 64% of American fuel production.

The USW issued a statement saying the refineries directly affected by the strike have optimum production levels of 1.82 million barrels of fuel per day. They include Tesoro’s plants in California and Washington state, Marathon Petroleum’s facilities in Kentucky and Texas, and complexes owned by Shell and LyondellBasell Industries in Texas.

The last time the union called a strike was in 1980, resulting a three-month work stoppage during which the companies used salaried workers to do the jobs of striking USW members. This one comes as oil companies around the world already are reeling because of the steep plunge in the price of oil, which has lost nearly 60% of its value since June.

Despite Shell’s stated eagerness to resolve the outstanding issues, the company turned to a strike contingency plan at its huge refinery and chemical plant in Deer Park, Texas, to keep it productive. Other companies were doing likewise, including Tesoro, which said managers were operating its refinery in Carson, Calif., and planned similar substitutions at its other affected facilities.

The USW said all other refineries where its members work would continue operating under rolling 24-hour contract extensions, just as in 1980. These facilities including Exxon Mobil’s refinery in Beaumont, Texas.

Originally written for OilPrice.com, a website that focuses on news and analysis on the topics of alternative energy, geopolitics, and oil and gas. OilPrice.com is written for an educated audience that includes investors, fund managers, resource bankers, traders, and energy market professionals around the world.

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