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Hedge Funds Boost Bullish Oil Bets

Hedge Funds Boost Bullish Oil Bets

Portfolio managers increased their bullish…

15 Refineries Now Affected As USW Strike Expands

Fifteen refineries in the United States are now the targets of a strike by the United Steelworkers (USW) after the union and the principal management negotiator, Shell Oil Co., recessed without reported progress on worker health and safety issues at the facilities. No new talks were immediately scheduled.

Members of the USW work at more than 200 US oil terminals and pipelines as well as refineries and chemical plants. They began the strike at nine oil refineries and chemical plants on Feb. 1 after negotiations with the US arm of Royal Dutch Shell failed to produce a three-year agreement covering 30,000 hourly workers.

The negotiations had begun Jan. 21 with a settlement deadline of midnight, Jan. 31. The USW had rejected five offers by Shell, which also was negotiating on behalf of several other large oil companies operating in the United States, including Chevron Corp. and Exxon Mobil Corp. The union has rejected seven contract offers.

Related: Strikes The Latest Threat Facing US Oil Industry

The strike spread to two more sites on Feb. 8, with the union accusing the companies of bad-faith bargaining and even making threats against union members. It expanded yet again on Feb. 21, now affecting 15 facilities, including 12 oil refineries with one-fifth of the country’s refining capacity. It is now the largest strike in the US oil-refining sector in nearly 35 years.

The strike expansion came just after the latest round of talks recessed without a settlement on Feb. 20. The USW notified three refineries that they would be targets of a walkout: Motiva Enterprises refinery in Port Arthur, Texas, which refines 600,250 barrels per day; and Motiva’s refineries in Convent and Norco, La., which together process 473,000 barrels per day. It also struck Shell’s Norco chemical plant.

“The industry’s refusal to meaningfully address safety issues through good faith bargaining gave us no other option but to expand our work stoppage,” USW International President Leo Gerard said in a statement.

On Feb. 18, more than two weeks into the strike, an explosion injured four contract workers at Exxon Mobil Corp.’s refinery in Torrance, Calif., which processes 149,500 barrels of oil per day. The union sent a text message to its members saying the accident highlights the need to negotiate for safer working conditions. “Safe refineries save lives,” the message said.

Related: Oil Searching For A Bottom As Union Threatens More Walkouts

In The Hague, Netherlands, where Shell has its headquarters, spokesman Ray Fisher said his company was “extremely disappointed” that the union had expanded the strike because it sets the “wrong tone” for both parties to make any progress.

Since the strike began, the companies have been using replacement workers to keep the refineries and other facilities operating at acceptable levels. Only one refinery has shut down due to the strike, Tesoro’s facility in Martinez, Calif., which processes 166,000 barrels per day.

Just before the strike, the Tesoro refinery had been scheduled for a partial shutdown for an overhaul. When the strike began, the company chose to shut down the plant altogether for the duration of the walkout.

By Andy Tully of Oilprice.com

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