Yesterday, the United Steelworkers (USW) union – negotiating on behalf of some 30,000 oil workers nationwide – said that it has struck a tentative deal with Royal Dutch Shell plc RDS.A, the company representing refinery operators, to end strikes at multiple refineries and chemical plants.
The Strike
USW-affiliated employees began work stoppages after the previous contract expired at the end of Jan. The six week walkout, the largest to hit refineries in 35 years, engulfed approximately 7,000 union members across 15 plants throughout the U.S. who demanded better workplace safety and amenities, apart from wage revisions.
Impact of the Strike
In particular, the labor strike affected fuel prices on the West Coast, as it took out almost a fourth of the region’s gasoline-producing capacity. As a result, gasoline in California has become dearer by more than 25% during the last month, now costing an average of $3.40 per gallon.
The New Agreement
The proposed four-year accord between the union and the Shell-led operators including Exxon Mobil Corp. XOM, Chevron Corp. CVX, Tesoro Corp. TSO, Valero Energy Corp. VLO and BP plc BP was reached after a month of contentious talks. It is believed to address concerns regarding salary hikes, safety concerns and employee workloads. However, the agreement still needs to be ratified by local USW members, who will work with the plant operators to take care of specific issues.
Effect on Pump Prices
While the spike in California gasoline prices could, partly, be also attributed to an explosion at Exxon Mobil’s Torrance refinery last month, the resolution of the strike will surely go a long way in alleviating pain at the pump.
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