A California oil refinery shut down during the pandemic. A year later, former employees were not all right.
The Atlantic, By Annie Lowrey, April 26, 2023
In 2006, James Feldermann got hired as a trainee at a refinery in Martinez, California, in the Bay Area. It was hard work, with 12-hour-minimum shifts, but Feldermann came to excel at it. He learned how to isolate pipes and vessels, load railcars with molten sulfur and ammonia, and helm an industrial control panel. In time, he rose to the position of head operator at the Marathon Petroleum site. The job paid well, and he enjoyed it. He expected to stay until retirement.
On a Friday afternoon in July 2020, Feldermann was abruptly summoned to an all-hands Zoom meeting. While some of his colleagues struggled to get the audio to work, Feldermann received a phone call from his union representative. “I didn’t actually hear management tell us that they were laying us off,” he told me. The plant was being shut down, as the rise of work-from-home and the spread of electric vehicles depressed Californians’ demand for gasoline. Feldermann and his co-workers would be out of a job in 90 days.
The United States is embarking on an epochal transition from fossil fuels to green energy. That shift is necessary to avert the worst outcomes of climate change. It also stands to put hundreds of thousands, perhaps millions, of people like Feldermann out of work. The result could be not only economic pain for individual families, but also the devastation of communities that rely on fossil-fuel extraction and a powerful political backlash against green-energy policies.
A pathbreaking new study [BenIndy editor: see indent below] shows just how real the damage could be, absent policies to soften the economic blow. Virginia Parks, a professor at UC Irvine, and Ian Baran, a doctoral student, tracked the consequences of the Marathon shutdown in near-real time, getting more than 40 percent of the workers to return surveys and a smaller group to sit for interviews. They found that, more than a year after the shutdown, one in five Marathon workers was unemployed. Their earnings had declined sharply, with the median hourly wage of employed workers plunging from $50 to $38. Some workers were earning as little as $14 an hour. And those new gigs came with more dangerous working conditions.
[Editor >> See the UC Berkeley Labor Center’s executive summary: Fossil fuel layoff: The economic and employment effects of a refinery closure on workers in the Bay Area. Also, download the 39-page report, Fossil Fuel Layoff, here.]
To prevent other workers from experiencing the same, the Biden White House has promised to pursue a “just transition,” employing policies to ensure “new, good-paying jobs for American workers and health and economic benefits for communities.” But the green-energy transition is already underway. And it is not clear that it will be just.
The legendary American union leader Tony Mazzocchi pioneered the concept of a just transition a half century ago. Some industries are too toxic for society, he argued. But to shut them down in a way that punishes the workers in those industries, or the places where those industries are concentrated, would be unjust.
Just-transition policies are not merely about bailing out blue-collar folks. They are meant to defray the cost of having whole communities fall into persistent economic distress: a loss of social cohesion, people living shorter and sicker lives, the rise of “deaths of despair,” the growth of right-wing populism. They are also meant to generate political support for green policies, or at least dampen any backlash. Without them, “you risk dissuading future efforts that are for the societal good,” J. Mijin Cha, an environmental-studies professor at UC Santa Cruz, told me. “If we’re doing things that are for the benefit of society but screw over a bunch of people, that’s not a societal good.”
These policies have worked. The Ruhr region in western Germany, for example, once produced coal, iron, and steel, with extractive and heavy industry employing a majority of the region’s workers. The German government, labor unions, and industrial leaders came to a series of agreements to diversify its economy, providing payments for displaced workers and making investments in service-and-knowledge businesses. Employment in coal mining in the region went from 473,000 in 1957 to zero by the end of 2018. The area lost nearly 1 million production jobs but gained nearly 1 million service jobs.
Yet it is hard to identify many, if any, just transitions in the United States. Appalachia lost its coal jobs and gained an opioid epidemic. Detroit deindustrialized and fell into poverty and disrepair. The decision to open up trade with China sent millions of American manufacturing jobs overseas, and policy makers did little to create any in their place. Now the planned obsolescence of the fossil-fuel industry threatens to create new Rust Belts in regions economically dependent on extraction, such as the Permian Basin, in Texas, or the Bakken Formation, in Montana and North Dakota.
The problem is threefold. First, the United States does not invest heavily in industrial policy or place-based policy compared with some of its rich-country peers, though the Biden administration has started to push billions of dollars into both. If coal is leaving a region, Washington historically is not sending anything else in. Second, the country has lower rates of unionization and a much thinner safety net than other wealthy nations, making workers more vulnerable to the effects of mine closures and plant shutdowns. Third, the Republican Party tends to reject the premise that the country needs to move away from fossil-fuel production at all, making them a weak partner in setting up just-transition plans.
No wonder the Marathon shutdown went the way it did. John Bayer, a safety specialist, lost his job at the site, as did his two brothers. He told me that he was not offered any form of government help, aside from unemployment insurance. Bayer, who has two kids, sent out about 50 applications and received just two callbacks. He ended up at an agriscience firm that nearly matched his Marathon wage but provided fewer opportunities for overtime. “I ended up with a $60,000-a-year pay cut,” he told me.
James Feldermann wound up taking a job based in Reno, Nevada, for $17 an hour less than he was making at Marathon. He rented a small studio apartment there and spent months driving 200 miles back to the Bay Area every weekend to see his wife and son.
Both the state of California and the Biden administration are in the process of developing plans for a just transition to green energy. Those plans were too late for the Marathon employees. Many labor leaders, academics, and politicians think those plans are almost certain to be too little for fossil-fuel workers losing their jobs in the near future.
On paper, the challenge seems straightforward. The United States has roughly 120,000 oil-and-gas workers and 40,000 coal miners. The green-energy sector is adding at least that many jobs every year. Supply, meet demand. Why not create a job-matching service for those laid off; provide them with wage subsidies, transition assistance, and relocation funds; and watch the country’s emissions turn from smoke-gray to vapor-white?
A few reasons. For one, fossil-fuel companies employ about 1.7 million workers in the U.S., not 160,000, once you factor in all the labor not directly involved in extraction and refining. It takes a lot of workers to transport fuel, manufacture secondary products from it, and power communities with it. And it makes little sense to transition many of those workers directly into green-energy jobs. Oil-and-gas gigs tend to pay far more than solar and wind do. And workers in extractive industries tend to develop valuable, specialized skill sets, as Feldermann did. Their technical chops would be wasted selling rooftop solar systems, and their salaries would get cut in half.
The government also faces the challenge of supporting whole communities dependent on fossil-fuel extraction, not just individual workers. “Fossil-fuel companies tend to be dominant employers where they are located,” Michaël Aklin, a professor of economics at the École Polytechnique Fédérale de Lausanne, in Switzerland, told me. “When they shut down, the central node in that local economy disappears.” The consequences ripple out to the businesses and institutions that rely on the money those workers used to spend and the taxes they used to pay.
The crux of the Biden administration’s plan for a just transition thus far is a policy granting tax incentives to businesses investing in “energy communities.” In the long term, that might encourage companies to locate warehouses and jobs in the places where oil, gas, and coal facilities are closing. But incentives are, well, just incentives. What if private businesses choose not to locate in certain parts of Louisiana or North Dakota, despite the tax breaks on the table? What if they create jobs years after a shutdown has done its damage? What happens to places where no business wants to invest?
At this point, neither Sacramento nor Washington has developed a robust plan to reach out and help oil-and-gas workers one by one. That’s a necessary component, UC Irvine’s Virginia Parks told me. The government, she argued, should provide financial support to cover the gap between workers’ pre- and post-layoff wages, as well as aiding workers close to retirement. Legislators should set up programs to certify the workers’ skills so that outside employers can see just how qualified they are. Finally, the government should provide retraining and job-match services.
Last week, Tracy Scott, the president of the United Steelworkers Local 5, the union representing the Marathon employees, drove me around the closed refinery complex. It sits on emerald-green marshland near where the Carquinez Strait empties into San Pablo Bay. When we visited, the heavy machinery once used to turn sour crude into gas and petrochemicals was surrounded by a superbloom of California poppies and wild mustard. We both remarked on how beautiful it was. A little later, Scott told me that refinery workers tend to die young, and rarely get to take advantage of the retirement packages the union negotiates for them.
This place does not deserve to be burdened with this refinery, I thought. And these people do not deserve to suffer for its closure.