www.oilbargaining.org
Issue 21
●
March 2014
Lifting U.S. Crude Oil Ban Threatens USW Refinery Jobs
A proposal from Sen. Lisa
Murkowski, R-Alaska, to remove the 39year ban on U.S. crude oil exports could
result in a loss of USW refinery jobs,
higher prices at the pump, a threat to
national security and increased environmental degradation.
Politicians, the U.S. Chamber of
Commerce, the American Petroleum
Institute and major oil companies are
pushing for the end of the 1975 export
ban. Sen. Murkowski initiated the debate
with a Jan. 7 speech, arguing that the
Obama administration could change the
policy, perhaps by determining the
American light, sweet crude cannot “reasonably be marketed” in the U.S.—an
exception to the 39-year-old export ban.
“Lifting the crude oil export ban
would harm U.S. refineries and workers,”
said International Vice President Gary
Beevers. “Oil companies that engage in
exploration and production would reap
huge profits at the expense of their refining units that have to buy oil on the open
market. Also harmed would be independent refiners that do not engage in oil
exploration.”
Large refiners like Valero and smaller
refiners such as Philadelphia Energy
Solutions and PBF Energy have invested
billions in their domestic operations to
produce oil products for here at home
and for export. They oppose changing
the current system.
While many U.S. refiners process
heavier crude, some are upgrading their
facilities to handle the lighter, sweeter
varieties found in the U.S.
With domestic refining capacity running at an 88.7 percent utilization rate,
U.S. refiners could process a lot more
American crude than they do at present.
So that diminishes the need to remove
the ban.
Refinery Economics
Lifting the crude export ban would
ruin U.S. refinery economics. Currently,
U.S. refiners are enjoying low prices for
American crude. In the last few months
the price for U.S. crude has been as
much as $20-$25 a barrel lower than that
of international crudes. Crude from shale
formations across the country can only
be marketed to U.S. refineries, so the
price is low because there is not competition from other buyers to purchase the
American crude.
Everything changes when the export
ban is gone. More buyers raise the price
of crude. American refiners will be paying more for U.S. crude because of the
greater demand for it. A larger worldwide supply, however, will lower the cost
for overseas refiners who had been paying more previously because the supply
was smaller.
Confronted with higher crude oil
expenses, U.S. refiners would have to
raise their prices for petroleum products.
So the cost at the pump for gasoline and
diesel fuel would rise. Higher fuel prices
increase the cost of everything we buy
and less economic activity is the result as
people cannot afford the gas to travel. It
is a domino effect.
Lost Jobs
If U.S. refiners have to pay a higher
price for crude, their profits decrease. If
they cannot make a decent return on their
investment or their losses mount, they
will shut down their facilities.
Shutting down a refinery impacts an
entire community. Not only are direct
refinery jobs lost, but indirect ones are
gone as well. These are jobs at suppliers
for the refinery, contractors and businesses that refinery employees patronize.
Studies show that that there are up to 10
secondary jobs created for each direct
job at a refinery.
Remember the former Sunoco refinery
in Philadelphia? Sunoco was going to
shut it down in 2012 because their only
supply of crude oil came from overseas
and the market had jacked the price up
so much that the company couldn’t
afford to operate anymore.
Thanks to the USW and the hard work
of the Local 10-1 membership, a buyer
was found and now the refinery is owned
by Philadelphia Energy Solutions. The
plant now gets its raw crude from the
Bakken Shale in North Dakota. The
USW saved 2,500 direct refinery jobs
and up to 25,000 jobs dependent on business from the refinery and its workers.
Competing Against Cheap Labor
Paying lower prices for crude because
of the U.S. energy boom gives U.S.
refiners a competitive edge over refiners
overseas. But if the crude oil export ban
is lifted, U.S. refiners would have to
compete against overseas refiners that
have lower crude oil costs and labor,
safety and environmental standards that
are not equivalent to those found in the
U.S.
This could lead to more oil product
imports and fewer U.S. refinery jobs as
refineries close and turn into oil product
terminals.
The U.S. Bureau of Labor Statistics
(BLS) reports approximately 117,000
jobs in the refining and coal processing
(continued on next page)
Lifting U.S. Crude Oil Ban Threatens USW Refinery Jobs
(continued from first page)
sector as of December 2013. “The dominant process is petroleum refining that
involves the separation of crude petroleum into component products through
such techniques as cracking and distillation,” the BLS states.
BLS statistics also indicate an annual
mean wage of $64,460 for refinery workers. These salaries reflect the routine
dangers of oil refining those workers
must handle, the skill needed to properly
operate multi-billion dollar refinery
units, and the collective bargaining workers have done with the industry over the
years.
The loss of even 10 percent of these
jobs would devastate refinery communities across the U.S.
Lost Exports
U.S. petroleum product exports
exceeded imports in 2011 for the first
time in over 60 years. Changing current
export controls over crude oil would
undercut value-added refining for export,
thus negatively affecting the U.S. trade
balance.
Since the U.S. is not self-sufficient in
oil, it would have to replenish every barrel of crude that is exported with a barrel
of imported crude. Much of this imported oil would come from unstable parts of
the world that are not friendly toward
U.S. interests.
Eliminating the crude oil ban would
likely increase advanced oil recovery
methods like hydraulic fracturing as producers try to deliver all the oil they can
to sell on the world market. It would not
reduce the environmental impact on
communities of fracturing. Improved
health and safety regulation is needed to
protect workers and communities
impacted by hydraulic fracturing.
Boom Will Not Last
Those pushing for lifting the crude oil
export ban act like U.S. oil reserves will
last forever.
The U.S. Energy Information
Administration (EIA) projects that U.S.
crude oil output will grow by an annual
800,000 barrels per day through 2016,
when it will reach 9.5 million barrels per
day. After that, production growth will
slow substantially, reaching a peak of
9.61million barrels per day in 2019, the
agency says.
By 2019, the EIA forecasts that
domestic production will meet 63 percent of domestic demand. Why export
away this oil when the U.S. needs it for
its own population and for national security interests?
“The reasons for not ending the crude
oil export ban are obvious,” Beevers
said. “Congress and the administration
should not even be considering incremental legislation that would lift the
ban in stages.”
Unite Labor Official Wins First Step in Getting
Reinstated at Ineos Refinery in Grangemouth, Scotland
A senior Unite official gets a favorable
ruling and back pay from an employment
tribunal for his unfair dismissal from the
Ineos petrochemical plant/refinery in
Grangemouth, Scotland.
An interim employment tribunal ruled
March 7 that Grangemouth convenor
Mark Lyon, a senior union official, will
likely prevail in his reinstatement case, and
it ordered Ineos to pay his salary from the
date of termination until the full hearing in
a number of months.
Lyon, who has 25 years of service, was
tried and dismissed in his absence by
Ineos managers for not stopping the union
from commenting to the media about job
loss fears at the plant.
Unite asked the tribunal to make an
interim finding in Lyon’s favor to avoid
the financial hardship he will face between
now and the final hearing over his dismissal for trade union activity.
The union also said there was significant medical evidence that Lyon was suffering from a serious stress-related illness
as a result of the treatment he had
“endured” from Ineos.
In a statement to the media, Unite legal
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The Oil Worker
director Howard Beckett said: “We welcome this interim finding which gives Mr.
Lyon some financial security until the full
tribunal where all the evidence will be
heard.
“It is a shot in the arm for
workers across the country and
sends out a clear message that
they can be a member of a trade
union and represent other workers without fear of victimization.
“Ineos needs to drop its hostility to the
work force and ensure there is no victimization of workplace representatives before
the brain drain of skills at the site becomes
a flood that threatens the site’s survival.
“Ineos should be in no doubt that we
will continue to fight for our members at
Grangemouth and pay heed to the interim
finding by starting to work with the representatives the work force has chosen.”
Of course, the company says it did an
investigation and followed the contract
when dismissing Lyon.
Last year, Ineos threatened to close part
of the petrochemical/refinery complex if
workers did not agree to a rescue package
to help secure the site’s future.
Unite is Britain and Ireland’s largest
trade union with over 1.4 million members
working across all sectors of the economy.
The USW and Unite forged a partnership
called Workers Uniting in July 2008 at the
USW convention.
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