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Possible US Oil Refinery Strike; Continuing British Refinery Strike
Posted by Gail the Actuary on February 1, 2009 - 9:20am
Update Refiners, Union Workers Extend Contract Talks as Strike Looms
Feb. 1 (Bloomberg) -- Royal Dutch Shell Plc and the union representing refinery workers extended talks on a new contract for at least 24 hours, delaying a possible strike that may affect almost two-thirds of U.S. capacity.
The groups made “sufficient progress” during talks yesterday, Lynne Baker, a United Steelworkers spokeswoman, said in a telephone interview. The rolling 24-hour extension began at 12:01 a.m. U.S. Central Time today and renews each 24 hours until the two sides reach an agreement or the union terminates the contract and gives 24 hour notice that it will strike.
“When you go to rolling 24-hour extensions, it appears they want to reach a settlement, which will keep the union working without disrupting refinery operations,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The negotiations cover workers at 86 plants representing about 64 percent of U.S. refining capacity, including operations owned by Exxon Mobil Corp., Valero Energy Corp., BP Plc and Chevron Corp. as well as Shell. Gasoline futures prices soared almost 10 percent last week on concern over a walkout.
We read in various newspapers that a possible strike of members of United Steel Workers union could affect workers at US refineries, chemical plants, pipelines, and oil terminals as soon as tomorrow (Sunday), if an agreement is not reached tonight. UpdateThe strike is now on rolling 24 hour extensions, so looks likely to be settled.
At least half of US refinery capacity may be affected. Some refineries have plans to continue operations, using management and non-union workers, so the reduction in capacity, if a strike occurs, is likely to be considerably lower. Refineries not affected by the strike still have considerable capacity, so I would expect some shift to those refineries. I have not seen many articles about possible impacts on chemical plants, pipelines, and oil terminals.
There is also a British refinery workers strike already in progress. Below are a few article excerpts, first about the US strike, and at the end, about the British strike. This thread is for readers to discuss what you are hearing about the two situations, and possible impacts if a US strike does occur.
Deadline Looms, Oil Talks Stall
Late Thursday, though, the two sides broke off negotiations after the union rejected the third offer from Shell. While talks resumed Friday, there was considerable distance between the two sides on health care insurance coverage and language within the health and safety guidelines.
People familiar with the talks characterized the negotiations as on the brink of a possible work stoppage in the nation’s oil sector. Not since 2002, when a strike was narrowly avoided, have talks been to this point.
“We are having difficult times in negotiations, and the talks are progressing slowly,” union spokeswoman Lynn Baker said.
One of the biggest sticking points comes as a result of the March 2005 explosions at BP’s Texas City refinery that killed 15 contract workers and injured more than 170 others. That blast and the subsequent investigations and lawsuits revealed lacking process safety standards industrywide — not just in BP’s Texas City operations...
BP has already pledged that, if there is a strike, it would not hire replacement workers or use management staff to keep its refinery — the third largest in the nation — operational.
U.S. refinery strike looms as contract talks drag on
Nearly 10 percent of U.S. refining capacity could be idled within days if union officials fail to reach a deal before an existing contract expires at 12:01 am CST on Sunday.
"We are having difficult times in negotiations, and the talks are progressing slowly," United Steelworkers union spokeswoman Lynne Baker said. The union rejected a third proposal from lead refiner negotiator Shell Oil on Thursday evening, Baker said.
Top U.S. refiner Valero Energy joined BP on Friday with a pledge to idle some of its refineries if there is a strike.
But other big refiners like Shell and Exxon Mobil say they plan to use replacement workers to keep their facilities churning out gasoline and other refined products should union workers strike. . .
The last nationwide strike by refinery workers was in 1980 and lasted about three months.
Managers, workers prepare for refinery strike
With just hours to go before labor agreements expire at 11 area refineries and chemical plants, workers and company officials were making preparations Friday for a possible strike.
Union members put together picket signs, and companies prepared their plants and management teams for possible work stoppages.
If a new agreement is not reached by 12:01 a.m. Sunday, 30,000 energy and chemical workers nationwide, including 4,200 in the Houston area, could walk off the job.
Union negotiators Thursday night rejected the latest contract offer that would have raised wages 2.5 percent each year for three years. The proposal also offered a one-time $500 ratification bonus and $250 a year to workers for their unreimbursed medical expenses, if they completed an unspecified health and wellness program.
Refinery Workers to Reject Offer, Threaten to Strike (Update3)
Members have already authorized the union to call a strike.
“This is a contract negotiation that the market needs to take seriously because the impact of a strike is potentially extreme,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York.
Gasoline futures for February delivery rose as much as 5.91 cents, or 5 percent, to $1.2426 on the New York Mercantile Exchange after Bloomberg reported the refinery workers would reject the latest contract offer and threatened to strike.
“Shell is optimistic that a mutually satisfactory agreement with USW can be made at this point,” said Stan Mays, a spokesman for Shell. Mays declined to comment further. Shell is negotiating on behalf of refiners across the country.
Strike Out: Nationwide Refinery Strike Could Mean Higher Gas Prices
Refinery workers may not have a whole lot of leverage right now. Thanks to the recession and plummeting demand for oil, refinery economics have taken a hit. Many refineries have been throttling back operations and shutting down refineries for maintenance ahead of schedule; the sector is currently operating at historically-low capacity levels.
A strike-induced, short-term refinery outage could soak up some excess gasoline sloshing around the groggy economy, serving as a boost to refinery economics. Shell and Exxon say they expect to keep their refineries running even in the event of a walkout.
But what if demand destruction in the U.S. has already run its course? Last week, gasoline stocks decreased in the U.S., even as crude-oil stocks rose significantly—a possible sign that gasoline demand, and thus pump prices, could be headed north again. Refinery shutdowns would just put additional pressure on gas prices.
NYMEX-Crude cuts gains, products up on strike fear
"Keep in mind that a refinery strike would mean lowerdemand for crude as well as reduced supply of products," said Tim Evans, energy analyst at Citi Futures Perspective.
"There's a very clear spread trade evident here," he added.
Of course, in Britain we already have a refinery workers strike going on. We read:
Thousands strike over migrant workers: 'British jobs' slogan backfires on Brown in UK-wide action
GORDON Brown's promise of "British jobs for British workers" came back to haunt him yesterday as thousands of contractors across the UK walked out in sympathy with workers striking over the use of foreign labour.
In the first sign of unrest at rising unemployment levels, there were protests at seven sites in Scotland, including Grangemouth oil refinery and Longannet, Cockenzie and Torness power stations.Around 1,000 contractors – many holding placards bearing the Prime Minister's controversial phrase – also gathered at the Lindsey oil refinery at the heart of the dispute, in North Killingholme, Lincolnshire.
Protests began at the site on Wednesday after the French-owned Total plant announced a £200 million construction project had been awarded to an Italian firm, which was bringing in 400 Italian and Portuguese staff to complete the work.
Wave of strikes piles pressure on government
The threat of deepening industrial unrest is piling pressure on the government to intervene in the dispute sparked by imported labour at energy plants.
Nuclear power plant employees will vote on Monday morning on whether to join engineering, construction and maintenance staff in sympathy strikes at around 20 sites across Britain.
The original strike began on Thursday at Lindsey Oil Refinery in Lincolnshire after French oil giant Total awarded a £200m contract to Italian firm IREM.
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A stealth gasoline tax??
;-)
If refiners don't have too much to lose (higher gasoline price on what is produced if some is taken off the market; lower wages for workers), they won't be as anxious to settle the strike--especially the companies that think they can keep their own refineries going with non-union workers.
It will be interesting to see how this plays out. In recent years, most of us think of strikes as not amounting to much of anything in the US. If workers are hurting enough, and employers are also hurting, and President Obama is not quick to intervene, things could change.
I've until recently thought of strikes as not amounting to much of anything in Canada, either. Then a public transit strike occurred (in Ottawa) and the consequences were readily apparent: far more traffic with more cars on the road, bus-dependent people losing their jobs, reduced productivity as workers arrived late and left early, the retail sector slammed in the crucial run-up to Christmas, businesses closed or hobbled.
The strike was known to have been a possibility around April 2008, but intransigence on the part of the union and city council was horrific. All levels of government dropped the ball. Local government, saving $3 million a week on salary, fuel and maintenance, played hardball at the expense of businesses and the general public. Provincial government, years ago able to order drivers back to work in Toronto within days, was not part of the equation because a few Ottawa routes cross the river--to Quebec. This interprovincial loophole meant Ottawa transit was in federal hands. But Parliament had been prorogued (on pause) due to a meaningless showdown over the budget in November. Eventually Parliament resumed and on the strike's 51st day, threatened back-to-work legislation. So the city and the union agreed to binding arbitration but it will be a week before the buses, left in snowy lots and chilly garages, get serviced, and months before full service resumes.
Not much to do with refinery strikes, but it also happens that lots of union contracts are up for renewal in these parts, so the talk of strikes has increased of late. All anecdotal evidence, I don't have numbers, but with increased fuel price volatility and competition for scarce resources, certain subsets of energy workers may find they have increased clout, and if compensation doesn't increase as fast as the clout, then of the various cards at their disposal, perhaps the strike card will be one that will be considered more and more in the future.
It's interesting the such a minor project could set off the masses. Obviously protectionist principles are beginning to replace open trade policies. British Jobs for British workers. America First in the stimulus bill. PBS Evening News shows the Port of Long Beach at a practical standstill. Let's see how flat the world is after this mess has come and gone.
I hope the UK workers do focus on the companies and not the workers. I've generally been anti union in my life, but I think corporations could use a nice sucker punch in the chin for a few years.
I hope people don't walk away from their jobs. I do hope people just stop buying stuff economy be damned.
Let's make February "I'm not buying anything" month. I'll start.
Dear All.
It is complicated here. The principles of the European Union are based upon the free movement of goods and labour within the EU. Until the recent economic catastrophe this was not seen as a problem. Now that jobs are being lost, it is a problem. There is an underlying feeling here in the UK that the others in the EU dont play ball and would not allow capital projects to be built by non-nationals within there own countries. Although this strike is essentially at refineries, it may also spread to Power Plants and has already spread to Nuclear Stations.
What is really striking about this specific event is the speed at which it happened and grew. As a general rule, the Brits tend to moan, grumble and then do nothing. We do not have the same flair for mass action as say the French who are of course world class at protests.
This time it could be different. There is a seathing undercurrent of anger from Joe Public: The Bankers ripped us off; the Politicos lie and steal and Globalisation / regionalisation steals jobs; The pension apartied between the private and public sector is huge and the eventual tax bill for bailouts is a killer for at least a generation; The culprits go unpunished etc. And this is only the start of the depression.
I would not read too much into this specific event just yet: I do not anticipate fuel shortages soon. In order cause that they will need the truckers as in 2000 and COBRA will not let that happen easily. Apart from anything else, secondary action / picketing or 'wildcat strikes' were made illeagal some time ago and workers can be instantly dismissed for taking such action. But it could flip. People are really angry this time.
Without a doubt, I think there has been a sea change this time around compared with the 80's and 90's recessions and the likes of the BNP are already making capital out of it. And to cap it all, we can expect a Siberian Weather System early next week.
Rgds
Dropstone
yup
politics/tribal social system is now Liebigs law of minimum, not energy. I really worry about the UK.. Powderkeg....
Valero was already trying to close or sell some refineries. The union members might walk out and get locked out.
We have more refineries than we need in the US, especially the less complex ones. As more refineries get built overseas, and world oil production drops, the amount of excess grows.
Dropstone - ...The principles of the European Union are based upon the free movement of goods and labour within the EU. Until the recent economic catastrophe this was not seen as a problem...
Specifically, it wasn't a problem around London where the investment, government, 'charities', NGOs and all funny money is located. Politicians happily ignore the sale of strategic UK companies to overseas owners, uncontrolled massive immigration and loss of control of infrastructure.
For those who don't know the UK - it has a 'rust belt' that starts in Northamptonshire [approx 60 miles North of London] and just keeps going North, West, and East..Almost all the Northern towns [ie 50+% of the population] that grew for industrial reasons have been declining for 30 - 150 years. These regions have few 'career'/unionized/pension paying jobs. Basically it's sales, service, admin and consumption.
I had to laugh at Gordon's remedy, when he was interviewed:
Apprenticeships for the school leavers to address a 'skills shortage'!
http://news.bbc.co.uk/1/hi/uk/7863341.stm
Are there any employers who do not whine about 'skills shortages'??
The UK has a massive surplus of overskilled, overeducated underemployed workers. I would guess its probably true in all first world countries.
The closest I ever came to using my electronic engineering degree was cabling up idiots to PCs. I say the UK revolution is 200 years overdue - bring it on.
If some fraction of our refineries idle due to a strike...wait an hour then tune in to Faux Noise to hear the strident, breathless calls to crush the unions with the National Guard...heck, what was I thinking, those reactionary bozos will call for the first use of active duty U.S. military commanded by USNORTHCOM. They will say anything for ratings, and to dare the weak-kneed Dems to one-up them or else appear to 'hate America' and appease the 'socialists'.
Couldn't the government just give several trillion dollars to Exxon, Conoco, and Chevron, pay all their executive bonuses, and then create a "bad refinery" and staff it with all of the basket cases from each of the other refineries?
I understand this same general approach has been utilized in other sectors with some success.
Not long ago, economic experts were bemoaning the shortage of refining capacity in the USA.
The huge big bully, that big bloated and dirty, damned government and the dirty, damned, anarchist enviro-terorists -- the worst sort of Terrorists of all, with a Capital T -- were abusing the Poor Little Oil Industry by preventing newer and bigger and better refineries to be conveniently built in Everyman's backyard.
Now, you see, those nasty bully union people are beating up the Poor Little Oil Industry and probably are hurting their lobbyists and paid-off politicians as well.
Those terrible union people are beating up on the under-compensated, overworked oil industry executives and threatening a strike.
Expect the right wing to demand that Blackwater and the US military occupy all refineries, imprison the union members there.
The Union terrorists must work for no pay at all as a punishment for their ingratitude and Un-American activities.
The Unions are not satisfied with a living wage you know, they still want health insurance, retirement benefits, vacation time, and probably a 40-hour work week. They probably still want overtime pay, too.
They should be officially labelled as Anti-American Terrorists and treated as enemy combatants.
Deliver this memo to Cheney, who will route it to Biden, who can drop it by Obama's office.
Copies can be made for the press.
By the way, send a copy to both Houses of Congress and the Judiciary, just to bring them hope. Things have changed around here in the USA, you know. Fascism has a new face.
And let that be a lesson to us all.
Thank you, and good night.
And, Blackwater will certainly be looking for new contracts. The Iraqi government has refused to extend their operating license.
What? How could they be so ungrateful? Not to mention Anti-American?
Do we need to use more White Phosphorus munitions there, and then charge them for it?
Maybe that will solve the problem.
If we keep doing what we have been doing, we will keep getting what we have been getting.
Of course, Iraq is a far distance from these refinery strikes in the USA.
Here is an odd tangent, but relevant.
I've watched parts of the PBS series "Make 'em Laugh" and have noted that many comedians did scathing criticism of the Establishment -- going all the way back to Charlie Chaplin. Before that, there was plenty of print media critique, from cartoons to pamphlets and even some real journalism.
I may not be a good comic, but I am concerned that we still have "Change" as a political fairy tale brought to us by the other fascist party in this country.
I do not envy President Obama at all. Between the ongoing Global War To Steal Resources And Maintain Full Spectrum Dominance, The War On Our Habitat, and The War Against Economic Reality, he has his hands full. Other nations can only envy us our ability to wage these wars all at once, at this point.
But it will be challenging to watch as we try to wage the continuing War On Unions. We will not likely ever need all of those refineries again. Worse, the Unions seem to share the fairy tale economic and political premises of the businesses with which they disagree. They do not see what is coming at all, and seem to believe the fairy tales.
Do we deserve this? Yes, we do!
Can we change? Yes, we will!
Will we still demand to live in a fairy tale? Yes, we will!
Will we learn from this experience and actually change ourselves?
That is an open question, I think.
How long will the rolling 24-hour extensions last?
My guess is that the union does not want to look like they are bringing hardship on the rest of us -- and surely they would be tarred with that brush if the strike actually happens.
I wonder, too, if back-channel communication is happening with PR firms and political parties "not now, guys, the ship is already sinking... hold off on that strike or you will lose any chance of a place on the too-few lifeboats.
As if anyone has a certain chance of financial survival these days. Let alone any other kind of survival.
Many places are cutting people back to 32 hours or less, and cutting benefits as well.
Will the unions negotiate for limited cuts in pay and bennies just to keep the un-needed refineries open awhile longer?
We could just shut most of them down and import more finished product from all of our friends overseas, could we not?
Sorry for the sarconal -- I'm just so tired of the BAU posturing that prevents us all from addressing the reality we face.
Really, a strike at a highly automated modern refinery is a non-event. Management can keep the refinery running and contract workers are available for maintenance. Back in the 1960s, during a lengthy strike at Shell's large Deer Park, Texas refinery, production was not only maintained but efficiency records were set.