Oil workers in US begin first large-scale strike since 1980

United Steelworkers of America president Leo Gerard at his Pittsburgh, Pennsylvania office. The USW started a work stoppage yesterday after failing to reach agreement on a labour contract that expired yesterday. “Shell refused to provide us with a counteroffer and left the bargaining table. We had no choice but to give notice of a work stoppage,” Gerard said.

Bloomberg/San Francisco

The United Steelworkers union, which represents employees at more than 200 US oil refineries, terminals, pipelines and chemical plants, began a strike at nine sites yesterday, the biggest walkout called since 1980.
The USW started the work stoppage after failing to reach agreement on a labour contract that expired yesterday, saying in a statement that it “had no choice.” The union rejected five contract offers made by Royal Dutch Shell on behalf of oil companies since negotiations began on January 21.
The United Steelworkers union hasn’t called a strike nationally since 1980, when a stoppage lasted three months. A full walkout of USW workers would threaten to disrupt as much as 64% of US fuel production. Shell and union representatives began negotiations amid the biggest collapse in US oil prices since 2008.
“Shell refused to provide us with a counteroffer and left the bargaining table,” USW International President Leo Gerard said in a statement early yesterday. “We had no choice but to give notice of a work stoppage.”
Ray Fisher, a spokesman for The Hague, Netherlands-based Shell, said by e-mail on Saturday that the company remained “committed to resolving our differences with USW at the negotiating table and hope to resume negotiations as early as possible.”
The USW asked employers, which include Exxon Mobil Corp and Chevron Corp, for “substantial” pay increases, stronger rules to prevent fatigue and measures to keep union workers rather than contract employees on the job, Gary Beevers, the USW international vice president who manages the union’s oil sector, said in an interview in Pittsburgh in October.
The refineries called on to strike span the US, from Tesoro Corp’s plants in Martinez, California, Carson, California, and Anacortes, Washington, to Marathon Petroleum Corp’s Catlettsburg complex in Kentucky to three sites in Texas, according to the USW’s statement.
The sites in Texas are Shell’s Deer Park complex, Marathon’s Galveston Bay plant and LyondellBasell Industries’ Houston facility, the statement shows. The walkout also includes Marathon’s Houston Green cogeneration plant in Texas and Shell’s Deer Park chemical plant.
More refineries are standing by to join the sites on strike, according to two people familiar with the plan who asked not to be identified because the information isn’t public. The remaining USW-represented sites are operating under rolling, 24-hour contract extensions, the USW said.
Shell activated a “contingency plan” to continue operations at the Deer Park refinery, Fisher said on Saturday.
Beevers said in October that he was expecting “the most difficult negotiations that I’ve seen” as workers fought for better pay and benefits. Local USW units established funds to help compensate workers during a strike for the first time in at least 20 years.
Refiners’ shares on the Standard & Poor’s 500 have more than doubled since the beginning of 2012, when the steelworkers last negotiated an agreement. Marathon and Tesoro Corp went on that year to take their place among the 10 best performers in the S&P 500 Index.
US fuel producers have been cashing in on the biggest-ever domestic oil boom, driven largely by volumes extracted from shale formations using hydraulic fracturing and horizontal drilling. The surge in output has lowered US oil prices by 55% since June 20 and contributed to a global supply glut that has also sent international prices tumbling.
During the last bargaining year, United Steelworkers and Shell took about a month to reach a national agreement.
The USW rejected at least four offers that year before agreeing to a contract that called for pay increases of 2.5% in the first year and 3% in the second and third years.
The national agreement, which addresses wages, benefits and health and safety, serves as the pattern that companies use to negotiate local contracts. Individual USW units may still decide to strike if the terms they’re offered locally don’t mirror those in the national agreement.