The United Steelworkers (USW) union, representing workers at about two-thirds of US oil refineries, is issuing strike notices after rejecting a fourth contract proposed by Royal Dutch Shell PLC on behalf of energy companies.
The steelworkers’ national agreement with Shell, Exxon Mobil Corp and other refiners expired yesterday. The union has not called a strike and is notifying local management “so preparations can be made” should one occur, USW spokeswoman Lynne Hancock said on Saturday.
The USW described Shell’s latest proposal in a telephone message as “insulting” and instructed all local units to reject it.
Union leaders and Shell have been meeting since Jan. 21 to reach a new three-year agreement. A nationwide strike would threaten to halt as much as 63 percent of US fuel production and slow operations at more than 200 US refineries, terminals, pipelines and chemical plants.
“Negotiations continue with USW with the intent of reaching a mutually satisfactory agreement prior to contract expiration,” , Shell spokesman Ray Fisher said in an e-mail on Saturday.
Shell’s fourth contract proposal was rejected as the two sides remain far apart, according to two people familiar with the talks, who asked not to be identified because the information is not public.
The union and Shell have the choice of extending negotiations past the current contract’s expiration.
Shell and its Motiva Enterprises LLC joint venture have not received strike notices at their refineries, Fisher said. Exxon, based in Irving, Texas, has received one at its 344,600 barrel per day Beaumont refinery in Texas. Hancock said by telephone from Nashville, Tennessee, that she did not immediately know whether other refineries had received notices.
“This action was initiated by the union, and we do not believe it is in the best interest of our local employees,” Exxon spokesman Todd Spitler said in an e-mail on Saturday.
Spokesmen for Tesoro Corp, a San Antonio-based company with most of the refining capacity in the western US, and Houston-based Phillips 66 Co said their companies have not received strike notices.
Oil explorers and the contractors that help them drill wells, build offshore platforms, lay pipelines and feed rig crews have been whiplashed by the seven-month rout of oil markets that saw the value of a barrel of crude shrink by 57 percent.
Gasoline and diesel prices at the pump have plunged and many refiners are worried about their profit margins, though companies have reported stronger-than-expected fourth quarter profits.
The industry has responded by cutting more than 30,000 jobs, halting exploration projects and deferring investments in everything from gas-export terminals to petrochemical plants.
Additional reporting by Bloomberg
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