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Oil and gas unions must fight for a Just Recovery

13 November, 2020The Covid-19 pandemic is causing a crisis in the oil and gas sector. Global lockdowns and the restriction of air travel have led to a collapse in the oil price, affecting the profitability of parts of the sector. Unions must be prepared to fight for investment in a Just Transition.

This was the message delivered by IndustriALL Global Union energy director, Diana Junquera Curiel, to a network meeting of oil and gas sector trade union activists, held online on 12 November.

Junquera explained that there has been a collapse in demand for petrol, jet fuel and other refined petroleum products due to the global economic slowdown caused by the pandemic. The collapse in demand for oil had led to a price crash. Most oil companies are maintaining extraction, because oil rigs are a sunk cost that are comparative cheap to operate. However, they are significantly reducing their refining capacity. Many companies plan to close refineries, and tens of thousands of refinery workers are likely to lose their jobs.

The effect of the low oil price is different in producer and importer countries. Producer countries have seen a major reduction in income and often a currency crash. This has had a devastating impact on the economies of those countries, particularly those with large public sectors funded by fossil fuel income.

By contrast, importing countries such as China and India have taken advantage of the lower price of crude and increased their storage capacity.

Junquera presented research commissioned by IndustriALL into trends in the industry. The research showed that despite the public relations offensive launched by energy companies about their embrace of renewables, there was very little real investment. The company which had invested the most – Total – had invested less than 4.5 per cent of its capital expenditure on renewables. Other companies have invested far less.

Oil and gas companies are spreading their bets by investing comparatively small amounts in a number of different renewable, storage and energy management technologies. Companies are cutting their losses to free up capital for future investment. They are waiting for market signals and government decisions before making major investments.

Junquera warned that trade unions would likely go through a difficult period due to refinery job losses, and that the lack of investment in renewables means that Just Transition will not happen on its own. Unions must be aware of developing trends, stay united and start to negotiate Just Transition plans now.

The meeting heard reports from oil and gas trade unionists around the world, including Algeria, Australia, Belgium, Italy, Japan, Norway, Russia, Spain, Thailand, Turkey and the US. The delegates confirmed the trends which has been identified, and spoke about how it was affecting the industry in their countries. Many had played active roles in defending the jobs and health of oil and gas workers as the pandemic spread around the world.

Placing the meeting in a wider political context, IndustriALL assistant general secretary Kemal Özkan urged unions to be vigilant about how recovery funds are spent.

“The current system has failed,” he said.

“It has only created inequality. How will the money in stimulus packages be spent? Will it be spent on making things worse, or on building a fairer world?”

Image: Lindsey G on Flickr CC