STEEL workers in the US are engaged in an indefinite strike which began on Sunday at nine large oil refineries.
Shell fears that the strike will spread collapsing the price of oil even further.
The strikers, who are in the United Steel Workers union (USW), are demanding a pay rise and the end of dangerous conditions: ‘the daily occurrences of fires, emissions, leaks and explosions’.
Crude oil futures plunged three per cent after the refinery workers strike paralyzed ten per cent of the petroleum market.
It is the largest refinery strike since 1980 and could potentially affect 64 per cent of the US market if more refineries join the walk out.
Oil prices have more than halved since last summer and are now trading around $47 a barrel.
During the last bargaining year, United Steelworkers and Shell took about a month to reach a national agreement.
USW International President Leo W. Gerard said: ‘This work stoppage is about onerous overtime and unsafe staffing levels.
‘There are dangerous conditions the industry continues to ignore; the daily occurrences of fires, emissions, leaks and explosions that threaten local communities without the industry doing much about it.
‘The strike is also about the industry’s refusal to make opportunities for workers in the trade crafts, the flagrant contracting out that impacts health and safety on the job; and the erosion of our workplace.
‘Qualified and experienced union workers are being replaced by contractors when they leave or retire.’
‘Shell refused to provide us with a counter-offer and left the bargaining table. We had no choice but to strike.’
The USW represents 65 US refineries and over 230 refineries, oil terminals, pipelines and petrochemical facilities in the US.
Vice President of USW Gary Beevers added: ‘We told Shell that we were willing to continue bargaining for a fair agreement that would benefit the workers and the industry, but they just refused to return to the table.’
USW International Vice President of Administration Tom Conway said: ‘This industry is the richest in the world and can afford to make the changes we offered in bargaining.
‘The problem is that oil companies are too greedy to make a positive change in the workplace and they continue to value production and profit over health and safety, workers and the community.’
Lynne Hancock a union spokeswoman said: ‘The USW has been asking employers for pay increases, stronger rules to prevent fatigue and measures to keep union workers rather than contract employees on the job.
‘It’s also negotiating for better health-care benefits because workers are paying too much for deductibles and premiums.’
US fuel producers have been cashing in on the biggest-ever domestic oil boom, driven largely by volumes extracted from shale gas (Fracking).
The surge in output has contributed to the collapse in oil prices and also contributed to a global supply glut that has sent international prices tumbling.
Hancock added: ‘The oil companies still make millions of dollars and they can afford to make these refineries safer so that our workers don’t get killed and injured and the community does not suffer the fires and explosions and emmissions that end up happening.’
The refineries on strike are capable of producing an estimated 1.82 million barrels of fuel a day, so the impact of the strike is enormous. The strike spans across the entire US.
Refineries are on strike in Martinez and Carson, in California, Washington, in Kentucky and three sites in Texas. Marathon’s Galveston Bay refinery in Texas can produce 451,000 barrels a day. Shell bought the company from BP Plc in 2013.
As many as 45 union workers were taking turns picketing the refinery in four-hour shifts. They wore green jackets and winter gear covering their faces, holding blue signs with ‘This Is An Unfair Labor Practice’ scrawled across them in white lettering.
David Jones, a 56-year-old pipefitter who has worked at the refinery for almost half his life, was at the union office a mile from the plant with other picketers getting his strike assignment on Monday.
He said many of the refinery’s supervisors have never worked its processors and other complex machinery before, or at least in many years.
‘I wouldn’t be surprised if the place isn’t running in a couple weeks,’ Jones said. It’s a very complicated facility. It’s not like getting in a car and driving away.’
Tesoro is shutting process units at Martinez, Tina Barbee, a spokeswoman at the company’s headquarters in San Antonio, said by e-mail on Monday.
The facility already had about half its processing capacity offline for maintenance. More refineries are standing by to join the sites on strike.
By the second day of the strike Brent Crude oil fell below $51.59 per barrel in London, and WTI, the North American benchmark, dropped to $46.88.
The strike means that more crude is sitting around in refineries, which adds to America’s already large oil stockpile. The last nationwide work stoppage in 1980 lasted three months.
Meanwhile Shell has resumed its Arctic drilling programme but has been forced to cut $15bn from its global investment.
The Anglo-Dutch giant’s chief executive Ben van Beurden accepted that Arctic drilling ‘divides society’, but said the world needs new sources of oil. Shell also announced a $15bn (£9.9bn) cut in global spending.
Shell also said profits for the last three months of 2014 had risen to $4.2bn compared with $2.2bn in the same period a year earlier. The numbers were below analysts’ forecasts, prompting a big sell-off of Shell’s shares, which were down by 4.3%.
Shell put its Arctic plans on hold two years ago after a drilling vessel ran aground and legal wrangles in the US. The company has already spent $1bn on preparing its drilling work in Alaska”s Chukchi Sea.
It was costing Shell several hundred millions of dollars a year to keep the existing operations ticking over, the company said. Estimates have put the mount of oil in Alaska at some 24bn barrels.
• Richard Trumka, the President of the AFL-CIO, the US equivalent of the British TUC, has commented on the new budget proposed by US president Obama.
Trumka says that while a number of proposals within it are part of a ‘robust programme to raise wages’ for workers, he was disappointed with Obama’s tax reform proposals.
‘In the State of the Union, President Obama forcefully advocated for working families and the bold actions we need to create an economy that truly works for all working people.
‘His budget follows through with a number of proposals that would benefit American workers, such as repeal of harmful sequestration cuts, higher taxes on capital gains, and a financial crisis fee on the largest financial institutions. These are all pieces to a robust program to raise wages.
‘But when it comes to fixing our rigged corporate tax system, the actual proposals in President Obama’s budget don’t match the rhetoric.
‘As this budget stands, it falls short of a very simple standard: our tax system should not encourage corporations to shift jobs or profits overseas.
‘We are also disappointed that the administration continues to propose corporate tax reform that does not raise significant amounts of revenue over the long term.’