United Steelworkers Calls Strike At 9 US Oil, Chemical Plants Over New Contract

HOUSTON (Reuters) -- Union leaders called strikes Sunday 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 conducted 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, or 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 counteroffer 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 could call on trained managers to use as replacement workers, so the walkouts are not expected to cause gasoline prices to spike.

Besides Shell, the USW said strikes were called at three plants belonging to the Marathon Petroleum Corp. in Texas and Kentucky, three refineries of the Tesoro Corp. on the West Coast and the LyondellBasell Industries NV plant outside Houston.

The USW said all other refineries it represents -- including the 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 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 nonunion contractors to start going to USW members, a tighter policy to prevent workplace fatigue and reductions in members’ out-of-pocket payments for health care.

Sliding Crude-Oil Prices

But the drop in crude-oil prices to around $47 a barrel since June may hurt 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. “But now, when the industry is facing hard times and layoffs have been announced, their bargaining power is limited.”

Independent refiners, such as the Valero Energy Corp., have made big profits recently by tapping cheap crudes from the U.S. shale revolution, while integrated companies such as Exxon Mobil have seen their U.S. refining units provide a cushion against low prices hurting their upstream businesses.

“Even though the refiners’ margins may not be as high as they were before the oil price decrease, the refiners are still making money,” USW representative Lynne Hancock said.

(Reporting by Erwin Seba; editing by Terry Wade and Jason Neely)