Workers strike for new pact at nine U.S. oil, chemical plants

Reuters News
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Posted: Feb 01, 2015 1:11 AM

By Erwin Seba

HOUSTON (Reuters) - Union workers took to picket lines on Sunday after strikes were called at nine U.S. refineries and chemical plants 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 about 10 percent of U.S. refining capacity. The discord comes as plunging crude prices force oil companies to slash spending.

The United Steelworkers union (USW) said Royal Dutch Shell Plc, the lead industry negotiator, halted talks after the union rejected a fifth proposal from the company.

"Shell refused to provide us with a counter-offer and left the bargaining table," USW International President Leo Gerard said. "We had no choice but to give notice of a work stoppage."

Shell said it would like to restart talks.

"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 and chemical plant in Deer Park, Texas, to keep operating normally.

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

Besides Shell, the USW said strikes were called at three plants belonging to Marathon Petroleum in Texas and Kentucky, three refineries of Tesoro Corp on the West Coast, and LyondellBasell's plant near Houston. At least two of the plants on the list have a history of deadly accidents.

The USW said all other refineries it represents - including Exxon Mobil Corp's refinery in Beaumont, Texas - would operate under rolling 24-hour contract extensions.

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 latest rejected proposal was the fifth turned down 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

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.

But the steep drop in oil prices since June may be hurting 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.

West Texas Intermediate crude delivered at the Cushing, Oklahoma, oil hub finished on Friday at $47.76 a barrel.

Oil prices rose more than 8 percent on Friday due to an attack by Islamic State militants toward the Iraqi oil production center of Kirkuk.

Lipow does not expect oil or gasoline prices to rise on the walkouts. "Attacks on Kirkuk will drive up prices, but a strike by the USW will not," he said.

(Reporting by Erwin Seba; editing by Jason Neely and Dominic Evans)