×

Union strikes at 9 US refineries in bid for new contract

Tesoro's oil refinery in Los Angeles
Lucy Nicholson | Reuters
Tesoro's oil refinery in Los Angeles

Union leaders called strikes on Sunday at nine U.S. refineries in a bid to pressure oil companies to agree to a new national contract covering workers at 63 plants.

The walkouts, the first held in support of a nationwide pact since 1980, target plants that together account for more than 10 percent of U.S. refining capacity. The discord comes as plunging crude prices force oil companies to slash spending.

Royal Dutch Shell, the lead industry negotiator, indicated talks had Ubroken down.

"We remain committed to resolving our differences with USW at the negotiating table and hope to resume negotiations as early as possible," Shell said.

Shell activated a strike contingency plan at its sprawling joint venture refinery in Deer Park, Texas, to keep operating normally.

Read MoreWhy you should buy energy stocks now: Expert

Other companies have said they could call on trained managers to use as replacement workers, so the strikes are not expected to cause gasoline prices to spike.

The United Steelworkers union (USW) did not say at which plants the strikes would be held.

But one source familiar with union plans said walkouts were called at Exxon Mobil Corp's refinery in Beaumont, Texas, two Marathon Petroleum refineries and LyondellBasell's plant near Houston.

Also included were Marathon's refinery in Kentucky, Tesoro Corp's Benicia and Martinez plants in California, and its refinery in Anacortes, Washington, the source said.

The expiring three-year national contract covers about 30,000 hourly workers at plants that together account for two-thirds of U.S. refining capacity.

The USW said in a text message sent to members that the latest offer from companies was "insulting".

The latest rejected proposal was the fourth offer turned down by the USW since negotiations for a new three-year agreement began on Jan. 21.

The USW is seeking annual pay raises double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to USW members, a tighter policy to prevent workplace fatigue, and reductions in members' out-of-pocket payments for healthcare.

Dropping crude prices

But the drop in oil prices to around $47 a barrel since last summer may hurt the union.

"I think the union would have had a lot more leverage six months ago when the price (of oil) was $100 a barrel," said Andrew Lipow, president of Lipow Oil Associates. "But now, when the industry is facing hard times and layoffs have been announced, their bargaining power is limited."

Independent refiners, such as Valero Energy Corp, have made big profits recently by tapping cheap crudes from the U.S. shale revolution, while integrated companies such as Exxon have seen their U.S. refining units provide a cushion against low prices hurting their upstream businesses.

"Even though the refiners' margins may not be as high as they were before the oil price decrease, the refiners are still making money," USW spokeswoman Lynne Hancock said.