Calif. Oil Refinery Shuts as Union Workers Strike Nationwide

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Getty ImagesTesoro's oil refinery in Anacortes, Wash.
By Erwin Seba

HOUSTON -- Union workers were on strike for a second day on Monday at nine U.S. refineries and chemical plants as they sought a new national contract with oil companies covering laborers at 63 plants.

The walkouts were the first in support of a nationwide pact since 1980 and targeted plants with a combined 10 percent of U.S. refining capacity. One of the plants, Tesoro's (TSO) 166,000-barrel-a-day Martinez, California, refinery, was being shut because it was in the midst of planned maintenance work.

The other refineries appeared set to continue running normally as operators initiated contingency plans, calling on trained managers as replacement workers. U.S. gasoline and diesel fuel prices rose Monday on concerns over supply, as well as a bounce in crude.

Talks broke down against a backdrop of plunging crude prices, down nearly 60 percent since June, prompting oil companies to cut spending.

The United Steelworkers union said Royal Dutch Shell (RDS-A), the lead industry negotiator, halted negotiations early Sunday after the union rejected a fifth proposal from the company. Shell said it would like to restart talks.

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

Tesoro said management was operating its refinery in Carson, California, and that managers would take over from union workers at its plant in Anacortes, Washington, in the next 24-48 hours.

Besides Shell and Tesoro, the union said strikes were called at three plants belonging to Marathon Petroleum (MPC) in Texas and Kentucky, and LyondellBasell Industries' (LYB) plant near Houston. At least two of the plants on the list have a history of deadly accidents.

United Steelworkers said all other refineries it represents, including Exxon Mobil's (XOM) plant in Beaumont, Texas, would operate under rolling 24-hour contract extensions.

Contract Negotiations

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

The latest rejected proposal was the fifth turned down since negotiations for a new three-year contract began on Jan. 21.

The union 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 United Steelworkers members, a tighter policy to prevent workplace fatigue, and reductions in members' out-of-pocket payments for healthcare.

Gene Oliver, president of the union chapter at LyondellBasell, said the company brought 10 issues to the table and didn't want to discuss all of the 36 points raised by the union.

"They were unwilling to work on the issues," he said.

Independent refiners, such as Valero Energy (VLO), have made big profits recently by tapping cheap crude oil from the U.S. shale boom, while refining units at integrated companies such as Exxon have provided a cushion against low prices hurting upstream operations.

But the drop in oil prices from $100 a barrel last summer has hurt the union's hand, analysts said.
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