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Crude oil prices fall as rail strike averted

Crude oil prices fall as rail strike averted

Rail unions agreed to a deal to avoid a massive strike that would have disrupted supply chains and halted the supply of basic commodities such as grain and ethanol mixed with gasoline.

The tentative agreement awaits a ratification vote from the 60,000 union members working for Warren Buffett’s BNSF, Union Pacific. (UNP) and other major railways.

Railway employees reached the agreement 24 hours before the Friday deadline, narrowly avoiding a halt in the delivery of power and agricultural goods.

Lifts and “peace of mind”

Railroad workers said they were punished for taking time off to go to medical appointments and even for family emergencies.

The Interim Agreements call for a 24% wage increase over the five years from 2020 to 2024, with a 14.1% increase in wages immediately alongside Five years annually. $1,000 in total payments.

Agreements were reached with the Brotherhood of Locomotive Engineers and Training Men of the International Brotherhood of Truck Dwellers. International Association of Sheet Metal Workers, Air, Rail and Transport – Transportation Division; And the brothers of the railway signals men. The three unions together represent about 60,000 railway employees.

The tentative agreements follow recommendations issued on August 16 by the Presidential Emergency Council.

The White House said the agreement was reached after several weeks of talks and then a lengthy negotiating session in Washington last night.

President Joe Biden said the deal includes salary increases, improved working conditions and “peace of mind” regarding health care benefits.

“The tentative agreement reached tonight is an important victory for our economy and the American people,” Biden said.

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Bargaining actually started nearly three years ago. Jeremy Ferguson, head of Intelligent Transportation, and Dennis Pearce, president of the Brotherhood, said the new agreement gives railroad workers the health care benefits they’ve fought for, including no increase in co-insurance premiums, deductibles and vacation doctor appointments. For engineers and locomotive workers representing conductors and engineers.

“For the first time, our unions were able to have negotiated contractual language to exempt leave for certain medical events from carrier attendance policies,” they said.

Union chiefs Ferguson and Pierce said that during the last 20 hours of ongoing negotiations, unions had reached an agreement that would freeze monthly health care contributions for members at the end of the agreement. The two unions, BLET and Smart-TD represent 125,000 retired and railroad workers,

They said the railway workers had met their quality of life requirements – the agreement provided for “voluntary leave days allotted to members working through the freight service and all members would receive an additional paid day”.

Ahead of the bargaining deadline, freight rail lines stopped accepting shipments of dangerous and security-sensitive items, and passenger train company Amtrak suspended long-haul service on Wednesday.

Commodity markets are declining

Commodity markets avoided what would have been major disruptions if the strike had occurred and lasted for more than a few days. That’s because shipments of energy and agricultural products such as grain will be delayed, leading to shortages and potentially higher prices.

Crude oil prices fell 2.7% in the latest check.

The strike risk had the greatest impact on ethanol, with 70% of the commodity being shipped by rail. Ethanol prices jumped past $2.60 a gallon on Sept. 14.

โ€œNearly all of the ethanol is transported by rail and produced in the Midwest,โ€ said Debneel Choudhury, vice president of refining and marketing at S&P Global Commodity Insights.

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He said near-record low inventory levels of gasoline and diesel in the United States are a problem because 15% of all crude and refined products are transported by rail.

Pete Meyer, head of grain and oilseed analytics at S&P Global Commodity Insights, said food supplies could also be disrupted by how far the United States is in the crop cycle.

Coal prices have also risen in anticipation of a strike and demand has increased by the ongoing war in Ukraine and European Union sanctions on Russian coal.

Impact on gasoline prices

Petrol prices could have risen by 35 to 75 cents a gallon if the strike had lasted more than a few days, said Patrick D. Haan, head of petroleum analysis at GasBuddy, a Boston provider of retail fuel pricing information and data.

The strike could have reversed many of the downtime drivers have received over the past three months. Gasoline prices have fallen for 13 consecutive weeks after hitting a national high of $5.03 per gallon on June 14.

He said that the ethanol was mixed with gasoline and because it could not flow into an oil pipeline, the strike would have hampered the refineries’ capabilities.

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