Steelworkers Union Warns of Strike at Philadelphia Refinery

Reuters, July 3, 2017

The United Steelworkers International (USW) has warned executives at the largest refinery on the U.S. East Coast that its members are prepared to strike unless cuts to health and pension benefits are restored, according to two sources familiar with the discussions. A warning letter was delivered on Wednesday to Philadelphia Energy Solutions (PES), a joint venture between Carlyle Group and Energy Transfer Partners, which operates the 335,000-barrel-per-day refinery on the south side of Philadelphia. The local USW chapter has scheduled emergency meetings for next week, and a strike authorization vote could come in the next two weeks, the sources said.

The refinery is a key gasoline and diesel suppliers for the Mid-Atlantic, one of the busiest parts of the country in terms of refined product demand. PES forced employees to contribute more to their health plans and suspended pension contributions last September as the fat refining margins from the Bakken rail boom disappeared. The local union contested the cuts, and the issue is in arbitration. The USW did not immediately respond to requests for comment and PES declined to comment on Friday.

A refinery strike unrelated to new contract negotiations would be highly unusual since all union contracts typically include no-strike clauses. Several refineries were hit by strikes in 2015 after contract negotiations stalled, forcing some to temporarily close. Carlyle helped rescue the refinery from closure in 2012. The move paid big dividends early as the refinery leveraged cheap crude shipped by rail from North Dakota's Bakken oil fields to amass large profits. However, the Bakken discount has disappeared, and so have the trains, sapping profits. PES and other East Coast refiners have been forced to return to refining West African crudes.

(Reporting by Jarrett Renshaw in New York; Editing by Jeffrey Benkoe)

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