Pump prices bumped higher over the last week, a federal report showed Monday, on anxiety over a possible refinery strike that would affect more than half the nation's capacity to turn oil into gasoline, diesel and other products.
But oil futures prices fell Monday partly because traders anticipated a labor contract agreement would be reached between refiners and the United Steelworkers union.
Negotiations continued, with both sides agreeing to roll the old contract forward another 24 hours each day as long as progress was being made, a union spokeswoman said.
That helped push light, sweet crude for March delivery down $1.60 to $40.08 a barrel on the New York Mercantile Exchange. More bad economic news also prompted traders to sell on the assumption that a deeper recession would squelch oil demand.
Oil futures are stuck between $38 and $48, analysts said, despite indications that producers were reining in output to try to shore up prices that have plunged from July's record of more than $147 a barrel.
The price of a gallon of self-serve regular gasoline climbed 5.4 cents nationally to an average of $1.892, according to the Energy Department's weekly survey of filling stations Monday. At this time last year, the U.S. average was $2.978 a gallon. In California the average rose 1.8 cents to $2.113 a gallon, still far below the year-earlier average of $3.107 a gallon.
Prices at the pump tend to lag behind movements in oil prices, which is how refinery labor talks had the opposite effect on gasoline and oil prices.
Work toward a new accord between the United Steelworkers and lead negotiator Shell Oil Co. was said to be making slow progress. The biggest points of contention, union spokeswoman Lynne Baker said, were healthcare benefits and health and safety issues.
The steelworkers union is negotiating on behalf of about 24,000 unionized refinery and pipeline workers across the United States who say they are prepared to walk off the job if the talks reach an impasse.
Energy experts differed on whether workers would strike.
"Hopefully, cool heads will prevail, but it's not looking good to me," said John Kilduff, vice president of risk management at MF Global. "Look for an immediate jump in gasoline prices of 10 cents to 15 cents a gallon if they do go out."
Tom Kloza, chief oil analyst for the Oil Price Information Service, could recall only one refinery shutdown from failed labor talks in the 30 years he has followed the fuel industry.
"A strike would be very atypical," Kloza said.
One labor expert saw evidence that labor was beginning to throw its weight around. UC Santa Barbara labor historian Nelson Lichtenstein pointed to the refinery contract talks, efforts by the International Brotherhood of Teamsters to organize truck drivers at U.S. seaports and the recent strike threat from utility workers who reached a tentative contract agreement Saturday night with Southern California Gas Co.
This is happening, Lichtenstein said, because unions perceive a friendlier climate in Washington with a new president, disillusionment with corporate America and a sense that the economic mess wouldn't be so severe had there been better management or more input from workers.
Union leaders also believe that labor's voice needs to be raised at a time when hundreds of billions of dollars of economic stimulus money is being negotiated, Lichtenstein said.
"The unions are viewing this as a once-in-a-lifetime opportunity to regain some of the ground they lost," he said. "You might think that a recession is the worst time to try to make gains from employers, but there is a general sense that we are here in part because of a lot of corporate greed and corporate incompetence."