HOUSTON (Reuters) — Making sure wages keep pace with record oil industry profits will be the top issue at the next round of contract negotiations between the leading U.S. oil refinery workers union and oil companies, a United Steelworkers official said on Aug. 6.
Although the contract talks aren't set to start until January 2015, the union just completed the first conference of refinery workers to assess issues of concern to members, providing an early glimpse of the union's likely negotiating agenda.
The union says single-digit percent wage increases have paled in comparison with profits that have soared in the oil sector in recent years.
"I think the industry is at a time of earning record profits," said Gary Beevers, international vice-president of the United Steelworkers union, which represents the majority of U.S. refinery workers. "They seem to be taking the position that the profits are theirs and they aren't going to share them."
A strike was narrowly averted during the last round of talks in 2012.
Workers at 69 of 142 U.S. refiners, equal to two-thirds of national crude oil refining capacity, are represented by the United Steelworkers.
"We're heading for a showdown," Beevers said of the negotiations still about 16 months away. "I think the next round of bargaining is going to the toughest we've ever engaged in."
In the past two rounds of talks with the oil industry, the USW pushed for tougher health and safety protections after deadly refinery explosions in 2005 and 2010 that claimed a total of 22 lives.
Before reaching its 2012 agreement with lead oil company negotiator Shell Oil — the U.S. unit of Royal Dutch Shell — the USW had alerted more than 30,000 refinery workers to prepare for a strike. An agreement came hours before the three-year contract expired, unsettling oil markets.
Workers in 2012 won pay increases of 2.5 per cent in the first year and three per cent in each of the two succeeding years of the agreement. The company also agreed to follow a standard meant to prevent fatigue, and put union health and safety representatives in the refineries.
Average national pay is about $34 an hour for union refinery workers.
At least six per cent of U.S. refining capacity would have been shut in the first days of a nationwide strike in 2012, based on company plans at that time. The last nationwide strike was in 1980 and lasted for three months.
Talks in 2009 with Shell were extended for three days to reach an agreement.
A Shell spokeswoman declined to discuss the 2015 round of negotiations.
"It is very early in the process and we cannot comment at this time," said Shell spokeswoman Destin Singleton.
In 2012, Royal Dutch Shell recorded profits of $27 billion. In the first two quarters of 2013, the company has reported a total of $10 billion in earnings.
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