U.S. Refining Output At Stake As Union Prepares To Strike

A trade union representing refinery workers and oil refining companies are both preparing for a strike in case wage negotiations that have been going on for a few days end with industrial action.

According to a Reuters report, the United Steelworkers union is currently holding talks with workers to decide on a new contract that would cover people working not only in refineries but also chemical plants and pipelines. The discussions follow the USW's rejection of a contract proposed by Marathon Petroleum, the lead negotiator for the industry.

The rejected contract had stipulations for a 9-percent wage rise over a period of three years, Reuters reported, citing unnamed sources. According to the same sources, both sides are preparing for industrial action, with refiners training replacement workers in case the strike goes ahead.

The final offer that refiners presented was a significant improvement on a previous version: earlier this year, refiners had proposed a 4-percent wage rise over three years, only a marginal improvement on the three-year contract that expired on February 1. That contract stipulated wage increases of 3.5 percent for each of the first two years, rising to 4 percent in the third year.

"Their wage proposals to date are paltry," the USW said at the time as quoted by Reuters. "In light of their earnings & dividends to shareholders, they are offensive. It's time for the companies to quit screwing around, recognize the seriousness of the approaching deadline and move towards a settlement."

A refinery strike right now would have an even graver impact on the industry than it would at any other time, with prices at the pump already too high for many. The last time refinery workers striked, in 2015, refineries had to slash production capacity by half, and one refinery shut down completely.

By Charles Kennedy for Oilprice.com

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