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It’s Time for Investors to Weigh In on Refinery Safety
Gary Beevers, United Steelworkers (USW) international vice president for Oil Bargaining, sends us this report. Beevers has extensive experience negotiating with major oil companies with the Oil, Chemical & Atomic Workers Union (OCAW).
A little after midnight on Good Friday last year, a heat exchanger on a naphtha hydrotreater unit at the Tesoro oil refinery in Anacortes, Wash., catastrophically failed. The unit exploded, setting off a blast that shook homes five miles away and igniting a fire that could be seen anywhere in Anacortes. Three oil workers died in the blast; four others died at the hospital from injuries sustained in the accident.
The Washington State Department of Labor and Industries (L&I) said the explosion was preventable. The U.S. Chemical Safety Board (CSB) reported that Tesoro failed to adequately maintain the nearly 40-year-old heat exchanger and that microscopic cracks had built up, making a rupture possible.
Companies need to “make the investments necessary to ensure safe operations,” said CSB Chair Rafael Moure-Eraso to the press.
Companies that continue to invest in safety and recognize its importance will reap benefits far into the future.
L&I Director Judy Shurke told reporters, “The bottom line is that this incident, this explosion and these deaths were preventable,” as she cited the company for 44 safety violations and issued a record $2.39 million fine. (Tesoro is appealing the fine.)
The Anacortes explosion was certainly not the only accident in the oil sector last year. In just the months of April and May there were 13 fires, 19 deaths and 25 injuries in the oil industry. That includes, of course, the Deepwater Horizon explosion that killed 11 workers and created one of the most devastating ecological disasters in history.
Our union has been working for years to pressure oil refiners to fix serious hazards and take real steps to improve refinery safety. We’ve suggested standards for reporting incidents at refineries to improve transparency and we’ve proposed standards to address fatigue and eliminate excessive overtime caused by companies not replacing a worker assigned to another job duty.
Our members have raised safety issues on the refinery floor, we’ve worked closely with fence line communities that are concerned with refinery safety, and we’ve taken these safety issues to Congress. Now it’s time for investors to weigh in on refinery safety because it impacts the bottom line.
This year, in collaboration with the AFL-CIO Reserve Fund, our union is presenting shareholder proposals at four major refining companies—Marathon, Valero, Tesoro and ConocoPhillips. Our proposal calls on each company to:
Prepare a report, within ninety days of the 2011 annual meeting of stockholders, at reasonable cost and excluding proprietary and personal information, on the steps the Company has taken to reduce the risk of accidents. The report should describe the Board’s oversight of process safety management, staffing levels, inspection and maintenance of refineries and other equipment.
An identical report was filed at Sunoco, but it was withdrawn when the company agreed to fully comply with the request.
Marathon, Valero, Tesoro and ConocoPhillips opposed our resolution. After seven workers were killed, Tesoro said it was committed to safety so a report on their performance wasn’t necessary. Valero said it was already disclosing numbers on its total reportable incident rate (TRIR) so information on process safety, staffing, and inspection and maintenance was unnecessary. Valero also said that publishing a report would be too expensive.
Refining companies usually don’t mind providing the public with data on reportable injuries. The problem is that information provides a deceptive picture of refinery safety. BP’s Texas City Refinery posted an incredibly low reportable injury rate just before the 2005 explosion that killed 17 people and led to the biggest fines in OSHA history. Simply put, reporting slips, trips and falls doesn’t tell us anything about whether or not an explosion is likely to happen.
It’s exactly this type of failed logic that led Transocean to give its executives ”safety bonuses” for turning in the company’s ”best year” in safety in 2010. In a filing with the Securities and Exchange Commission, management actually said “…we achieved an exemplary statistical safety record as measured by our total recordable incident rate and total potential severity rate. As measured by these standards, we recorded the best year in safety performance in our company’s history.”
Jon Stewart from “The Daily Show” did a great job capturing the absurdity. He said:
OK, that’s just crazy. You gave yourselves a safety bonus because statistically the Deepwater Horizon explosion, killing 11 people and pumping 200 million gallons of oil into the Gulf Coast counts the same as Bob cut his hand on a bolt—it’s just one incident.
It’s worth pointing out that, out of embarrassment, the executives donated their safety bonuses to charities working to clean up the Gulf Coast.
The real information that we need to know—whether or not a refinery is running safely—is the information we asked for in our shareholder resolution: the board’s oversight of process safety management, staffing levels, and inspection and maintenance of refineries and other equipment. To know whether or not there’s a risk of a deadly explosion, we need to know whether or not people at the top level of the company are directly involved in process safety; we need to know how much overtime people are working and what the risk of fatigue is; and we need to know whether or not the company is inspecting and maintaining its refineries.
I honestly don’t know if the bankers and billionaire stockowners care about whether or not oil workers die. But I do know that they care about making money. And blowing up refineries is bad for business. Not only do these accidents lead to months of downtime and cause insurance rates to go through the roof, they’re also bad for the public perception of our industry and drive down investor confidence.
So whether they’re doing it to save lives or just to protect their investments it’s time for investors to weigh in on refinery safety. Their profits, and our lives, depend on it.
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3 Comments
Sorry, the comment form is closed at this time.
This is without a doubt a serious issue. Just last week here in Wilmington California the local refinery down the street had a fire that burned out of control for hours. I recieved a call from our office in WIlmington that they were evacuating the building due to the hugh amounts of smoke in and around our building. Looking over to that direction I could see the hugh pillar of black smoke raising upwards with the noise of sirens in the air. It was a scary feeling. Luckily, they did get it back under control and put out.
Bob Madden
Yes, I agree. It’s high time that the American public start holding Wall Street investors responsible for the corporations that they invest in.
It brings up the sticky wicket/slippery slope of conflict of interests, however. Safety is not free. Making the workplace safe for workers will reduce the size of the quarterly dividends for those who own stock. Thus they will be faced with the choice of fattening their wallet or doing the right thing.
Doing the right thing often loses out on the chess board of life.
The problem in the USA is not just the upper 1%. It includes the upper 10% as well. Without their collusion, the highway robbery of the upper 1% could never happen. Unfortunately all members of Congress belong to this group of the upper 10% by virtue of the salary that we pay them. All of these people are heavily invested in the stock market. Then when you realize that all of the pundits who deliver the “news” through the various corporate owned media networks are also heavily invested in Wall Street, you can begin to see the extent of the influence.
As far as I’m concerned, any American who owns Wall Street stock is part of the problem.
Our first step for democracy is to realize that we have never had one and start to build from there
All well and good, but who do we contact? I pass all these stories around that are in your blog and get the same respone, to whom do we write? How about adding some company names that we can look up, or govt. departments, or something. We want to get involved but too many avenues are closed to us. Thanks.