Workers Threaten to Strike 3 Refineries
Oil industry workers on Wednesday threatened to strike as early as Sunday at three California refineries that Tosco Corp. is buying from Unocal Corp., raising the specter of higher gasoline prices for consumers.
The Oil, Chemical and Atomic Workers Union has rejected terms of the contract offered by Tosco that includes plans to cut 15% to 20% of the 900 jobs at refineries in Los Angeles, San Francisco and Santa Maria, said Kelly Quinn, president of OCAW Local 1-675.
Tosco is in the process of buying Unocal’s 76 Products Co., which is headquartered in Costa Mesa, including three refineries, more than 1,100 gas stations and the familiar 76 brand name. The deal, valued at more than $1.8 billion, is scheduled to close March 31.
But the refinery workers have been operating without a contract since early March, and negotiations have broken down over the proposed layoffs and other issues, Quinn said. The union notified Tosco and El Segundo-based Unocal on Wednesday of the possibility of a strike or other job action, he said.
“We could take a job action tonight if we wanted to,” Quinn said. “We’re just trying to be gentlemen about this. . . . Whether we do it or not is up in the air.”
A Unocal spokesman said company executives were unaware of any such notification. Tosco executives could not be reached for comment.
The impact of a strike on production is difficult to project because Tosco might be able to keep the refineries running using management personnel, said Susan Brown, deputy chief of energy forecasting and resource assessment for the California Energy Commission.
“The refinery owners do everything in their power to keep those refineries operating because every day they’re not operating means the owners are not making money,” Brown said.
But the head of a trade group representing gas station owners said a strike would almost certainly result in higher gasoline prices, which have been rising in recent months anyway.
“It’s the perfect excuse,” said Jan Speelman, executive director of the Automotive Trade Organizations of California, an Irvine-based trade group representing owners of 2,500 gas stations. “They will raise prices because they can.”
Gasoline prices in California have become especially vulnerable to disruptions in supply as the state’s refining capacity has declined with consolidations in the industry. The statewide average price of unleaded gasoline was $1.315 per gallon on March 17, compared with $1.198 at the end of 1996, according to the California Energy Commission.
Tosco, based in Stamford, Conn., has a reputation for buying money-losing refineries and squeezing profit from them by cutting costs sharply. Indeed, when Tosco bought the Marcus Hook refinery in Pennsylvania early last year from British Petroleum Corp., it refused to operate the refinery until the union agreed to new work terms. Tosco cut about a third of the 520 employees at that refinery.
At the Unocal sites, the layoffs would involve a variety of job categories--including firefighters--without regard to seniority, Quinn said. The cutbacks would not be in response to any reduction of operations at the refineries but would mean fewer workers doing the existing work, he said.
Tosco’s contract offer also included having workers pay 20% of their medical premiums, which would effectively wipe out pay increases negotiated with the entire oil industry last year, Quinn said. The union also objects to Tosco plans to cross-train workers so that equipment operators can do maintenance work, he said.
The Unocal refineries in Los Angeles, San Francisco and Santa Maria have combined capacity to process 251,000 barrels of crude oil a day. That represents 12.5% of California’s entire capacity of 2 million barrels of crude oil a day.
Tosco’s purchase of the Unocal 76 operations will make Tosco the second-largest refiner in California, after Chevron, and the third-largest retailer of gasoline, after Arco and Chevron.
Bloomberg News contributed to this report.
