Big Oil’s new playbook: How BP’s US refinery lockout signals a shift in corporate labor battles

By Nicole Jao

NEW YORK, Sept 3 (Reuters) – Don Skalka spent two decades as an operations specialist at the largest oil refinery in the Midwest, a well-paid job he enjoyed so much he brought his own children into the work.

But in March, BP locked out its workers at the Whiting, Indiana, refinery in a dispute with the union over its next contract. Skalka has gone without a paycheck ever since, and his son and daughter have taken lower-paying jobs at a nearby steel mill. He now collects donated groceries and union-fund checks to get by. 

“The little guys have been taking hits,” Skalka told Reuters at the United Steelworkers union hall during a recent interview. “I don’t know what we all did wrong to make everybody hate us so much.”

Skalka is one of the roughly 800 workers caught in the bitter standoff between BP and the nation’s largest oil workers’ union that labor experts, union representatives, and refining workers say poses a crucial test of the power dynamic between Big Oil and organized labor. 

If BP can maintain operations at the plant for a prolonged period using supervisors, contractors and replacement workers, it could weaken one of labor’s strongest arguments at the bargaining table: that companies ultimately need union workers to keep their facilities running safely and efficiently.

The outcome of the standoff is pivotal because large industry players historically set standards in future labor talks, said Robert Bruno, director of the Labor Studies Program at the University of Illinois. 

“It just further underscores the importance of how this negotiation turns out and what share of the profits is going to be distributed to the workforce,” he said.

BP told Reuters the Whiting standoff is simply meant to ensure the refinery stays competitive. 

“To secure those jobs in the future, we have to have a competitive refinery in the market that we’re in, and if we don’t, that’s what puts those jobs at risk,” said Chris DellaFranco, vice president of refining at BP’s Whiting plant.

By launching the lockout on March 19, BP has joined a handful of big oil refining companies in the United States, including Exxon and Marathon, that have used hardline tactics in recent years to secure concessions from labor in their drive to cut costs and boost competitiveness – even at times of soaring profits.

Exxon enacted a similar 10-month lockout in 2021 at its Beaumont, Texas, plant, pressuring the union to ultimately accept many of its key contract terms. Before this decade, such lockouts at U.S. oil refineries were uncommon because of the risks such disruptions pose to operations and fuel supply.

Marathon, meanwhile, has weathered two prolonged strikes at its plants since 2024, including one that is ongoing at its renewable fuels facility in Martinez, California – showing its willingness to do without regular operational staff to win concessions from the unions representing them.

BP and several other refining companies have recorded large increases in earnings in recent months as the fallout from the Iran war spikes retail fuel prices. President Donald Trump, wary of higher consumer costs leading into November midterm elections, has criticized refiners for making excessive profits while gasoline prices remain high.

UNDER PRESSURE

Sitting on the banks of Lake Michigan, outside of Chicago, the sprawling 440,000 barrel-per-day Whiting facility is one of the oldest major oil refineries in the United States and BP’s last unionized plant in the country after it sold many of the others.

The plant has long served as an economic anchor for northwest Indiana, supporting generations of union workers while providing roughly a quarter of the Midwest’s fuel. 

The British oil major and the United Steelworkers deadlocked in contract talks after BP broke from the industry’s national bargaining pattern and sought concessions on pay, staffing, strike rights and automation.

The national bargaining pattern is a deal forged by the USW with a lead company that is meant to provide a model for the rest of the industry. The latest such agreement had been negotiated by USW with Marathon in February and provided a 15% wage increase over four years.

BP’s proposals called for lower wage increases than the national deal, along with waived bargaining rights over the operational impacts of artificial intelligence and automation. The company also wanted to eliminate scores of jobs and expand flexibility around staffing – changes union leaders say could pave the way for outsourcing and leaner crews.

Eric Schultz, president of United Steelworkers Local 7-1, said BP is running “the exact same playbook” as Exxon did in its dispute in 2021. He also noted BP had hired Jordan Marcks, the former Exxon management official who oversaw the 10-month lockout at Beaumont, as their lead negotiator.

Exxon declined to comment.

Union representatives have argued such standoffs pose a safety and operational threat to refineries by replacing experienced labor with contract workers.

The Whiting refinery has experienced at least two operational issues since the lockout, though BP has said the incidents were not related to the labor dispute. 

WORKERS IN LIMBO

Whiting refinery worker Joe Trevino said he began tightening his budget months before the lockout, sensing a standoff was looming. But nature threw him for a loop in June, when a tornado struck his home. He’s now renting and spends his days juggling insurance claims, rebuilding plans, and picket-line duties.

“Eventually, if I need to, I’ll go out and get another job,” he said.

Other workers feel they don’t have that option.

“I really don’t think I have a choice,” said Renee Pleitner, a 46-year-old who started working at Whiting more than two decades ago, and who is the third generation of her family to work at the plant. 

“I don’t really know anything else,” she said. “Whether I take from my savings, my 401(k), I have to wait this out.” 

(Reporting by Nicole Jao in New York; Editing by Liz Hampton and Richard Valdmanis)