April 27, 2008

The Power of the Working Class

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You gotta love this. Two days ago, Scottish refinery workers organized in Unite - the Union struck, shutting down the Forties Pipeline through which at least 40% of the UK's North Sea petroleum and natural gas production flows! Watch oil prices spike even further in the next few days.

1300 workers walked out of the Grangemouth Refinery on the two day walkout.
In spite of last-minute industry pleas for government intervention, the trade union Unite refused to supply enough sufficient steam from the refinery to maintain the operation of BP’s adjacent Kinneil plant, which processes crude oil coming ashore from 70 North Sea fields.
Here is a nice map showing the numerous oilfields (including the original Forties field) now connected via the Forties Pipeline where wells have had to shut down as a result.

The strike is a direct byproduct of the same financial jiggery-pokery that has given us the deepening credit crisis. BP used to own the whole shebang and still operates it all, but they sold the Forties Field to a company called Apache and the Grangemouth refinery to a private equity fund called Ineos, keeping the pipeline.

Ineos, which borrowed over nine billion pounds for this and other investments, found that even soaring oil prices aren't enough in a difficult economic climate. Trying to squeeze the maximum possible return out, they announced the start of a two tier pension system, with new hires getting the shaft. (As here in the States with a tumbling stock market--net return in Britain since 2000=zero--and with other investments, like CDOs, doing even worse, pension funds are turning up seriously underfunded, and corporate executives really, really don't want to have to make up the difference.)

Unite said "Nope." (Well, it's Scotland. They probably said "Nae.") The two day walkout is estimated to have cost the UK economy about US$100 million a day, and production will take another six days to ramp up to normal. In Scotland, the Edinburgh bus system threatened to shut down due to a "reprioritized" fuel supply and widespread gasoline hoarding and price gouging were reported. In the UK, the opposition Tories are trying to make political hay demanding the government step in to force a settlement. Globally, it's one more ratchet up on oil prices.

1300 workers. Two days. And best of all,
Unite, which represents the 1,300 strikers, said it hoped to have talks with management in the next few days, but refused to rule out further industrial action.

[A good place to learn more is The Oil Drum blog, especially the comments thread.]

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