Because Gasoline isn’t Expensive Enough

Loren Kaye
President of the California Foundation for Commerce and Education

Good news: Mexico is reversing 70 years of direct control over its oil industry and welcoming private investment from abroad.

Bad news: the California Legislature is poised to declare California oil refineries “public works,” opening the door to more expensive labor rules and less-trained workers.

Mexico has wised-up, after seven decades of iron-fisted state control over oil development – and recent production declines. The move by the once-retrograde PRI party will add new vigor to an industry vital to Mexico’s development.  In a sad role reversal, the Legislature is sopping unions that prefer wage supports and closed shops to business and employment expansion.

Surfacing just days before the end of the 2013 Legislative session, Senate Bill 54 by Berkeley Democrat Loni Hancock would designate California oil refineries as “public works.” That’s right, for purposes of hiring skilled employees, refineries would be placed in the same category and subjected to the same requirements as a classroom remodel jobs or street repaving.

This is the sharp edge of the “public works” spear, the first – but assuredly not the last – instance of a purely private construction and repair project being subjected to the entire regime of state-mandated staffing, wage and unionization requirements.

The upshot of this legislation would be to require refineries to hire workers from specific unions, primarily in the building and construction trades, who have never before been trained to work on the highly complex and technical refinery machinery and processes.  Contractors with a longstanding working relationship with refineries employing skilled workers may not qualify for this work due to the wrong union affiliation.

California “public works” laws are sweeping in application, covering most jobs that incorporate even trivial amounts of state or local financial participation. When a job falls under the public works rubric, contractors must pay “prevailing wages,” which invariably reflect the local unionized wage level. Moreover, refinery maintenance and turnaround would be subject to strict requirements on use of apprentice and journey-level workers, no matter their experience with these jobs.

Given that refineries are highly technical workplaces handling high-pressure and volatile substances, you would think the Legislature would insist on managers using the best-trained and most experienced work force. That would be over-thinking this issue. Indeed, this proposal narrows the universe of eligible workers, mandating that a majority of workers be graduates of “approved apprenticeship programs,” which are unrelated to experience and specific on-the-job training (and which have not yet been approved).

Bottom line: this new legislative requirement would delay critical refinery maintenance projects, which would inevitably affect California’s fuel supply and potentially undercut safety improvements made over the years.

Craven obeisance to Big Labor nearly wrecked Mexico’s oil industry. Even the PRI knows when enough is enough. Can the California Legislature say the same?

Follow Loren on Twitter: @KayeLoren

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