Refinery workers, Shell reach tentative agreement

AP News
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Posted: Mar 12, 2015 6:53 PM

The United Steelworkers union has reached an agreement with Shell that could soon lead to the end of a six-week strike that has affected 12 U.S. refineries.

The union and Royal Dutch Shell have been negotiating a contract that would serve as a blueprint for agreements with other refiners.

The union said Thursday that the tentative agreement provides yearly wage increases and keeps the current level of health care cost-sharing. The agreement also provides for a review of staffing and workloads at refineries.

The union had accused refiners of creating unsafe conditions by relying heavily on overtime work and using a growing number of contract workers, who the union says aren't as well-trained as its members.

Union workers are expected to return to work as their local chapters reach agreements with refineries.

Shell did not immediately respond to a request for comment. One of the refiners represented by Shell, BP PLC, declined to comment.

A ratified agreement would end the first nationwide refinery strike in more than 30 years.

The strike began Feb. 1 with 3,800 employees at nine refineries, mostly in Texas and California, and later spread to other plants. Companies continued to operate most of the refineries with management and contract employees, although a Tesoro Corp. shut down a plant in Martinez, California, that had been partially idled for maintenance.

In recent weeks, gasoline prices have risen on the West Coast, where the idled Tesoro refinery was a key source of supply. The average price for a gallon of regular in California on Thursday was $3.41, up 70 cents or 26 percent in a month, according to the AAA auto club.

The national average has risen 10 percent, to $2.45, in the past month, according to AAA. Oil analysts have said that the strike was having a limited effect on production, partly because refineries are more highly automated than they were during the last nationwide strike, in 1980.

Geoff Goff, the CEO of Tesoro, which owns three of the refineries in the strike, told investors last month that his company could continue with current staffing "for a very long period of time."

Also, the amount of gasoline in storage has been higher than average for early in the year, according to the Energy Department. But if the strike dragged on, that could change with warmer weather and increased demand by motorists.