(Bloomberg) — On the eve of a contract expiring for 30,000 oil workers across the U.S. late Saturday, Royal Dutch Shell P.L.C. representatives walked away from negotiations, according to the employees’ union.
Health care was the final point of contention that caused the talks to break down and prompted Shell, which was bargaining on behalf of all oil companies including Chevron Corp. and Exxon Mobil Corp., to withdraw, the United Steelworkers said. While Shell said it “resumed communications” with the USW on Monday, no progress was made, according to the union.
Leo Gerard, international president of the USW, said the union leaders were insisting on a discussion about lowering members’ annual out-of-pocket maximum of $7,500 when Shell threatened to increase workers’ contribution to health insurance premiums if they didn’t drop the subject.
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“That’s when our people said, ‘That ain’t happening, we’re not taking it off the table,’ and then they got up and left,” Gerard said Monday in a phone interview from Pittsburgh.
Ray Fisher, a spokesman for The Hague, Netherlands-based Shell, said by e-mail late Monday that the company met with USW representatives earlier in the day to take contract discussions further and wants to come to a “mutually beneficial agreement.”
“We continue to be committed to resolving the remaining issues,” Fisher said.
Less than three hours after the contract expired, the United Steelworkers said it had called a strike at nine U.S. plants, including seven oil refineries that make up 10 percent of the country’s capacity. It’s the biggest work stoppage at U.S. oil refineries since 1980. While only one of the plants on strike is shut, a full walkout of USW workers would threaten to disrupt as much as 64 percent of U.S. fuel output.
Gasoline futures for March delivery advanced for a fourth day, gaining as much as 2.8 percent to $1.5884 a gallon in New York. The contract closed at a five-week high of $1.5446 on Monday.
The USW rejected at least five offers from Shell by the time it called the strike, according to union statements.
Oil workers represented by the United Steelworkers have been operating on an “80-20 plan” that requires them to pay 20 percent of their health premiums, Gerard said. The out-of-pocket maximum of $7,500, which members have to pay before health insurance applies fully, is on top of that, he said.
“Extrapolate that for three years, and you’re close to $24,000 out of pocket over three years in one of the richest industries in the country,” he said.
The union was also proposing that refiners work with it to establish an apprenticeship or training program that people would complete before being hired to perform maintenance at plants, Lynne Hancock, a USW spokeswoman in Nashville, said by phone Monday. It was also negotiating a “fatigue standard” that would require refiners to hire enough people to maintain safe staffing levels, she said.
Shell requires all of its employees to complete training, and the company has “an expectation that contracting companies working at our facilities have safety standards that meet or exceed” its own, company spokesman Fisher said in an e-mail.
The refineries that the United Steelworkers chose for the strike span the U.S. They include Tesoro Corp. plants in Martinez and Carson, California, and another in Anacortes, Washington; Marathon Petroleum Corp.’s Catlettsburg complex in Kentucky; and three sites in Texas — Shell’s Deer Park complex, Marathon’s Galveston Bay plant and LyondellBasell Industries NV’s Houston facility.
—With assistance from Caroline Chen in San Francisco and Rupert Rowling in London.