Labor Issues at BP Refinery Add Insult to Injury

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Written by Daniel Graeber for IIR Energy Intelligence (Sugar Land, Texas)

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Summary

BP locked out union members at its refinery in Whiting, Indiana, on Thursday. That could add to problems at the pump stemming from war raging in the Middle East.

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Union Not Playing Nice, BP Says

U.S. retail gasoline prices are as high as they were in summer 2022, when global energy markets were upended by Russia's invasion of Ukraine, and ongoing labor action at one of the nation's largest refineries could make matters worse.

IIR Energy notified subscribers this week that British energy giant BP said it would lock out around 800 workers supported by United Steelworkers starting Thursday at its refinery in Whiting, Indiana.

Among the largest and oldest in the nation, the Whiting refinery can process around 440,000 barrels of oil per day (BBL/d), largely drawn from feedstocks of heavy Canadian crude oil. BP in a statement to employees on Tuesday said the decision to lock out employees was not made lightly.

"However, the union has not accepted the company's contract proposals that are most critical to the long-term sustainability of the refinery," the company said. "In fact, the union has unequivocally rejected our company proposals twice now without offering a counter that addresses any of the company's concerns."

An employee told ABC-7 Chicago that BP rejected every offer presented by the union. It's unclear how long the lock-out will last, and there was no public statement from the United Steelworkers.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can learn more about Whiting--including capacities, investment values and necessary equipment--in a detailed plant profile.

It's Already Painful at the Pump

On Thursday, the wholesale price for gasoline, known as Reformulated Blendstock for Oxygenate Blending (RBOB), was up 2.4% in morning trading to move near $3.17 per gallon. Travel club AAA put the national retail average at $3.88 for a gallon of regular unleaded. That's up from an average closer to $3.60 this time last month.

The problem is compounded by the approaching refinery maintenance season, when refiners shift to make a summer blend of gasoline. That's more expensive to make because of the additional processing necessary to keep the product from evaporating in the tank during warm summer months.

Industrial Info is monitoring dozens of facilities that are scheduled for regular maintenance starting in April. On Wednesday, the Reuters news service, citing three sources familiar with the matter, reported that the federal government may waive some of the regulations governing the summer blend to provide some relief at the pump for consumers.

War Already Driving Prices Higher

Much of the recent spike in retail gasoline prices and diesel is a result of war raging in the Middle East, however. Iran on Thursday struck energy facilities in Kuwait and Saudi Arabia after Israeli forces bombed its offshore South Pars gas field, the largest in the world.

Retail gasoline prices are up from $3.01 since the war began in late February, jumping nearly 30% since then. U.S. President Donald Trump on Wednesday offered a 60-day waiver to requirements spelled out in the Jones Act, which requires that goods delivered between U.S. ports be carried by U.S.-built, U.S.-owned and U.S.-crewed vessels in an effort to control prices.

Maritime shipping only accounts for a small fraction of what consumers see at the pump. Crude oil prices are behind most of the fluctuations in retail gasoline prices. The price for Brent crude oil, the global benchmark, is up 53% since fighting began in the Middle East.

By the Numbers

• 30% spike in U.S. gasoline prices since war began
• 440,00 BBL/d In refinery capacity at risk from labor despute

Key Takeaways

• BP locks out employees at Whiting refinery.
• Gas prices were already proppsed up by a war premium

About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).