Processing Magazine

Strike by 24,000 refinery workers averted for now

February 2, 2009
A strike by 24,000 refinery workers has been averted, as both sides agreed to extend negotiations for at least 24 hours, according to the Associated Press. Workers at refineries near New Orleans, Houston and as far away as Billings, Mont., will show up for scheduled shifts at the start of the workweek. A spokeswoman for the United Steelworkers, which represents more than 30,000 oil workers nationwide, said they had made progress, but still had to work out some issues, so a strike would be on hold for now. The union agreed to a rolling 24-hour extension, which allows the union to give the required one-day notice to strike. The nation''s biggest refiner, Valero Energy Corp., said it would shut down some facilities if workers walk out. Other oil companies said its refineries would continue to make gasoline, diesel and other fuels using nonunion or replacement workers. Chemical refiners would also be affected. A strike would affect 60 producers. Union negotiators turned down the most recent offer of a 2.5 percent wage increase for each of the next three years, in addition to changes in medical coverage. This comes at a time when refiners are already cutting back production. Industry experts are divided over whether a strike would hit the pocketbooks of motorists. Job numbers are in free fall, which has led to unprecedented declines in miles driven by Americans. Motorists cut their driving by 12.9 billion miles in November, down 5.3 percent from the same month a year earlier, the largest such decline of any November since monthly data estimates began in 1971, according to the Federal Highway Administration. On the surface, that suggests retail gasoline prices should be falling, but refiners are reading the same headlines and have aggressively cut back production. Refiner cutbacks and the threat of a strike pushed gasoline futures up throughout the week on the New York Mercantile Exchange. With refiners turning away oil shipments, crude storage levels have risen by about 20 million barrels in the past month, according to the U.S. Department of Energy. Many of the refineries are on the Gulf Coast, near Houston and New Orleans. There are about 4,000 refinery workers in Houston alone. But the strike would also reach into states like California and Tennessee, which also have refineries with labor contracts expiring.