Refinery Strike Having Minimal Effect on Fuel Prices

Temporary workers and increased automation at refineries allowing near-normal output 18 days into strike.

February 19, 2015

NEW YORK – Despite a walkout at 11 refineries around the country, which began three weeks ago, the impact on the prices of gasoline, diesel and other fuels is barely discernable, says an Associated Press article this week. While prices have been trending up recently, the rise is mostly due to a sharp increase in the price of oil and because of annual seasonal fluctuations in fuel price. (Learn more about why prices traditionally go up in the spring in the 2015 NACS Retail Fuels Report.)

According to the AP report, refinery worker strikes have a different effect from strikes in other industries, like autoworkers or teachers, since refineries tend to not require as much “hands-on” work once they’re up and running. This sentiment was affirmed to the news source by Tesoro, who owns three of the refineries affected by the strike: "We can continue on running with the staffing levels that we have ... for a very long period of time," Tesoro CEO Geoff Goff told investors last week, as quoted by the AP.

Many of the affected refineries continue to operate at near-normal levels because they have been able to line up enough managers, former employees, employees from other locations and contract workers to keep the refineries going. Improved technology has also made refinery operations more automated, making them less dependent on individual workers. While the affected refineries have the capacity to produce about 2 million barrels per day, the strike is likely reducing output by about 200,000 barrels per day, York estimates. That's a little more than 1% of daily U.S. consumption of 19 million barrels per day, according to news sources.

Union and oil company representatives are expected to renew face-to-face negotiations this week, following a week's hiatus. However, if negotiations break down further, the strike could spread to other U.S. refineries.

Advertisement
Advertisement
Advertisement