Tag Archives: Refinery closures

Just transition, Oil refineries, Refinery workers

The Green Revolution Will Not Be Painless

A California oil refinery shut down during the pandemic. A year later, former employees were not all right.
Mario Tama / Getty

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.

Annie Lowrey is a staff writer at The Atlantic.
Air pollution, Air Quality, Coronavirus, Covid 19, Greenhouse gas emissions, Keeping Watch on Earth News, Oil Industry, Refinery closures, Toxic pollutants

Emissions are way down. No, that’s not all good news for the environment.

Chaos in the oil sector could actually intensify climate change.

Mother Jones, by Rebecca Leber, April 21, 2020
Getty

As the coronavirus cripples world economies, greenhouse gas emissions are plummeting: This year, they could drop by as much as 5.5 percent—the largest decrease ever recorded. On Monday, the price of oil went negative, meaning storing oil now costs more than the oil itself. Since we’re burning less gas and fuel, air pollution has dropped 30 percent in northeastern cities, and Los Angeles’ notorious smoggy skyline has cleared.

You might be thinking all this is great news for the environment. It’s a nice idea—but the real story is more complicated. “You don’t want companies collapsing like this,” says Andrew Logan, oil and gas director of Ceres, a think tank focused on sustainable investment. “Even the most ardent climate advocate shouldn’t wish for a chaotic transition in this sector. A chaotic transition brings all sort of pain to workers and also the environment.”

It helps to think of COVID-19 as a test run—a very painful one—of what an industry in decline will look like. “We’re seeing, as is case the now, what the cliff looks like if everyone shuts down at the same time,” Logan says.

With a glut of supply, North America producers Exxon, Shell, Devon Energy, and Cenovus Energy have already collectively announced spending cuts this year totaling $50 billion, according to the Wall Street Journal. In North Dakota, Trump donor Harold Hamm’s Continental Resources drilling company has cut output by 30 percent the next two months. In Canada, the famously destructive tar sands are too expensive to mine and refine on oil prices this cheap. Even the Southwest’s Permian Basin, the most productive region for oil and gas in the United States, is expected to see dramatic closures.

Environmentalists are worried about what comes next, because of the many unintended consequences of market chaos. For starters, when gas prices tank, Americans will likely start buying more cars and taking more road trips, driving up demand all over again.

Other environmental problems aren’t quite so obvious. Lorne Stockman, a senior research analyst with the climate advocacy group Oil Change International, worries that the coming bankruptcies this year “are an environmental nightmare in the making,” with “wells left to rot as bankruptcy proceedings are going through.”

As the industry contracts, some drilling operations will simply leave their wells, and many don’t have the funding set aside to take proper precautions to make sure greenhouse gases and other pollutants don’t leak out. Environmental advocates are especially worried about leaks of methane, a particularly potent greenhouse gas.

Abandoned wells are already a big problem. Even in relatively good times, oil and gas wells still dry up. When they do, they might be sold to smaller, sometimes less scrupulous operators to tap what’s left in the well. Then those operators eventually abandon the well or go bankrupt. They can’t afford to clean up the site, which involves plugging the well with cement to avoid leaks into groundwater.

We don’t know for sure how many of these wells exist around the country, though the EPA estimates there are more than 1.5 million of them that have accumulated over a century. Wyoming has had thousands it’s in the process of plugging, and Pennsylvania has 8,000. Taxpayers will eventually pay for both cleanup and environmental damages.

Drilling operations that don’t shutter will have to find ways to cut costs. In boom times, methane is valuable to drillers because it can be captured and reused for fuel. But when oil and natural gas prices have crashed in the past, drillers have sought to get rid of excess methane in the cheapest way possible—by burning it (a process known as “flaring”) or simply letting it leak into the atmosphere (called “venting”). Both processes can contribute to climate change and contaminate surrounding communities. Flaring and venting worry many environmental advocates. The International Energy Agency notes that “low natural gas prices may lead to increases in flaring or venting, and regulatory oversight of oil and gas operations could be scaled back.”

Methane emissions hit a 20-year high last year, according to the National Oceanic and Atmospheric Administration. Although scientists don’t fully understand why, they believe that fracking operations may dramatically underestimate the methane they release. According to the Environmental Defense Fund, operations typically lose 15 times the rate that producers report because of malfunctions and intentional venting. The COVID-19 crisis could lead to more leaks, because companies won’t have any incentive to capture methane to use for fuel.

Amid the turbulence in the oil sector, the Trump administration has continued to roll back environmental regulations, and it has already undone Obama-era rules targeting methane emissions from oil and gas operations.

Nathalie Eddy, a field advocate for the environmental watchdog Earthworks, is worried that environmental contamination will be made worse as the administration weakens rules. “When the market falls like this one of the first things that will go is the limited capacity for inspection,” she says. The EPA, Department of the Interior, and Department of Transportation have already announced they will suspend some routine inspections and monitoring, including pipeline reporting and field inspections, and waive civil penalties if violators say COVID-19 was a factor.

Climate advocates have urged the EPA and Department of the Interior to require companies to monitor methane leaks and set aside money for their cleanup. To help the sector recoup the lost revenue, they propose a job stimulus program aimed at reclaiming these sites for the double-duty benefit of a clean environment and keeping workers employed.

But so far, those pleas are going unanswered. The Trump administration has floated several schemes for helping the oil sector: During the first round of stimulus, congressional Democrats managed to shoot down the oil industry’s bailout request. Now, the administration is considering paying producers to leave crude in the ground until the global glut shrinks. Meanwhile, the major banks want some collateral for the $200 billion they are owed from oil companies: According to Reuters, JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup could even seize the industry’s assets, which could pose an enormous conflict of interest for a financial sector that just months ago was signaling a move away from the oil sector.

So far, it looks like the short-term emissions drop won’t result in any lasting policy improvements, Stockman says. “We have seen the wrong kind of stimulus that isn’t aimed at changing our relationship to fossil fuels.”