US Refineries, Union to Begin Contract Talks in January, as Industry Leans More on AI
U.S. oil companies and more than 30,000 refinery and petrochemical workers represented by the United Steelworkers union will begin negotiations on a new national collective bargaining agreement designed to address wage, safety and job security issues as the use of artificial intelligence expands in the industry.
A group of refiners led by Marathon Petroleum are scheduled to meet with the USW meet in January as the current four-year labor agreement is set to expire on Jan. 31. Union members work in refining, production, pipelines, maintenance, storage and petrochemical facilities that account for about two-thirds of all U.S. refining capacity.
The talks come as many analysts expect refining margins will remain steady in the new year and U.S. average gasoline prices in December were the lowest since 2020, according to OPIS data.
“Our union looks forward to negotiating a strong contract that not only sets fair wages and safe working conditions but helps ensure a long-term future for” members, Mike Smith, chairman of the USW’s National Oil Bargaining Program, said.
“This includes our intention to bargain over AI, working to ensure that new technology isn’t used ways that may displace or diminish our members or their jobs,” he added.
AI is being widely deployed by oil-and-gas companies to automate complex tasks, reduce costs and maximize yields. Some refiners companies have adopted AI to predict equipment failures in scheduling turnaround maintenance and to fine-tune units to optimize production.
The union also said the talks will include training, protections against layoffs and benefit security when facilities are bought or sold.
“As the lead company in national pattern negotiations, Marathon is committed to engaging in productive negotiations with USW and working toward a mutually beneficial agreement,” company spokesman Jamal Kheiry said. He didn’t respond to a specific question about AI.
Collective bargaining agreements are negotiated at both the national and local levels. Nationally, representatives from both sides meet to set industry standards for issues like wage increases and healthcare expenses. In addition, local unions negotiate with employers over site-specific issues such as work schedules and rules and safety.
USW said the two-level talks give it more power to bargain on major issues by uniting oil workers across the country regardless of employer and allows it to address site-specific issues.
The union and refinery in early 2022 signed a four-year labor deal that included annual salary increase ranging from 2.5% to 3.5% and addressed other issues such as healthcare-cost sharing and minimum severance if a plant was closed.
The talks will come at a time when Phillips 66 has closed its 156,000 b/d Los Angeles refinery and Valero Energy is moving to shut its 145,000 b/d Benicia refinery in Northern California by spring.
After the parties failed to reach a contract in 2015, the USW called for work stoppages at seven refineries in Texas, Kentucky, Washington and California, a petrochemical plant and a cogeneration facility at one refinery.
Should the two sides fail to reach a new deal by Jan. 31, refiners could hire temporary workers and bring back retired workers to keep the plants running in an effort to minimize any fuel shortages.
Reporting by Frank Tang, ftang@opisnet.com; Editing by Jeffrey Barber, jbarber@opisnet.com
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