Threat of Refinery Strike Could Push Gas Prices Higher

Union workers at Tesoro’s Anacortes, Washington refinery have authorized their representatives to call for a strike, one month after rejecting a new contract over benefit issues.

AP

Tesoro Refinery, Anacortes, WA

While no strike deadline has been set, the threat of a walk out by the facility’s 190 union workers comes as gasoline prices in the Pacific Northwest hover above $4 a gallon, due in part due to a production outage at one of the region’s biggest refineries.

“We clearly consider all the impacts that a labor dispute would have, “ said United Steelworker representative Gaylan Prescott, of the potential impact on area gas prices which could result from a strike. “I think that those considerations are why we didn’t see a strike occur on February 21.”

Union workers at Tesoro’s three west coast refineries in Washington, Hawaii and California rejected a three year contract agreed to by union leaders, in January, in a dispute over benefits and safety issues. Workers at the Martinez, California refinery voted in favor of strike authorization earlier this month.

Analysts say a disruption in refining at the Anacortes facility, with a capacity of more than 120,000 barrels per day, could impact gasoline prices in Washington and Oregon. BP’s Cherry Point, Washington refinery remains offline because of a recent fire and maintenance issues. It is the largest in the region with a capacity of more than 220,000 barrels a day.

“If you were to shut down another refinery up there,” said Andy Lipow, President of Lipow Associates, “We could see gasoline supplies getting quite tight.”

But Lipow says Tesoro will likely be able to continue to operate the refinery with management staffing. During the last national refinery strike in 1980, he says, most refiners were able to continue operations.

“It’s a rare even to see a refinery strike that impact a market,” says Tom Kloza of Oil Price Information Service, because management can continue to operate for a time without its workers, and will likely do so with gasoline fetching high prices in the region.

“Right now it’s profitable to operate that refinery, “ Kloza said.

A spokesperson for Tesoro said the company continues in talks with the union representatives from the United Steelworkers, or USW.

“We continue negotiations at our USW represented Tesoro refineries and work toward ratification of all agreements,” said Tesoro spokesperson Tina Barbee in an e-mailed statement. “In the unfortunate event of a strike, we will activate our contingency plans, which are considered confidential for proprietary and competitive reasons.”

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