After years of running flat out, US Gulf Coast refiners are lining up repairs to plants in 2017 — but facing a severe labor shortage that could delay work, drive up costs and raise accident risks.
Fuel producers such as Marathon Petroleum Corp. and Valero Energy Corp. have delayed routine work in the past 24 months amid high margins. Those margins collapsed this year in a global fuel supply glut, providing an incentive for refiners to undertake the shutdowns necessary for maintenance.
But refiners are now competing for pipe fitters and ironworkers with a host of billion-dollar energy projects, including Cheniere Energy’s liquefied natural gas export terminals and a new petrochemical unit for Dow Chemical.
Without undertaking the work they need, refineries run the risk of more unscheduled outages at plants. Plant shutdowns can disrupt fuel supplies and are closely tracked by oil traders because they directly affect demand for crude and supply of fuel.
“Putting off work definitely affects the safety of the refinery,” said Ed Lee, an independent refinery safety consultant who worked at Royal Dutch Shell for three decades.
Refiners can mitigate the risks — but at a cost, by slowing output or avoiding types of crude that are difficult to process, Less said.
In recent months, a spate of unexpected outages have hit refineries nationwide, taking hundreds of thousands of barrels off the market and boosting gasoline prices and margins.
US refiners are expected to spend $1.26 billion on planned maintenance next year, up 38 percent from this year and the highest level since at least 2010, according to Industrial Information Resources (IIR), which tracks labor supply for refiners and other industrial companies.
Many will struggle to execute those plans, said Anthony Salemme, a vice president at IIR.
“Refiners are going to have trouble finding even the lowest skilled workers, such as scaffold builders, and you can’t do work at a refinery without a scaffold,” Salemme said. “That’s going to complicate scheduling and even extend outages.”
IIR estimates that the coastal region from Brownsville, Texas to New Orleans — the largest US refining region — will be short roughly 37,400 craftsman needed to complete all of the planned capital projects in 2017.
“We are definitely feeling the labor shortages in skilled craft labor,” said Paul Tooze, construction manager for the oil, gas and chemicals business at Bechtel, one of the world’s largest industrial contractors.
Tooze said the company spends a lot of time and money to attract and retain employees, but still has to bring in workers from other regions to complete projects. That typically requires $100-per-day travel allowances that drive up project costs.
Bechtel employs between 40 percent and 70 percent workers requiring daily allowances on their Gulf Coast projects, Tooze said.
The shortage will be most acute in Lake Charles, Louisiana, the home to several refineries and petrochemical plants. There, South African energy firm Sasol is investing billions on a chemical project, and the call on labor for the plant is one of the reasons the area will be short more than 18,000 workers in 2017, according to IIR.
Sasol raised its cost estimate on the project in August by 25 percent to $11 billion, in part due to rising labor costs.
Chevron Phillips — the joint venture between Chevron and Phillips 66 — is spending $6 billion on building a petrochemical units in Baytown and Old Ocean in Texas. Labor costs would drive the projects’ costs up 10 percent from previous expectations, Phillips 66 President Tim Taylor said in an earnings call earlier this month.
Fluor, one of the world’s largest industrial contractors, took a $154 million charge on the plant in November due to cost overruns, including labor.
Earlier this year, Fluor opened a skilled craft training center in the Gulf Coast, stating that while the firm could not train its way out of the shortage, it hope to alleviate the problem.
Refiners are also competing for workers with a broader range of power companies, pharmaceutical firms and industrial manufacturers nationwide, which are also preparing for a spike in maintenance projects in 2017, according to IIR.
In the southwest region that includes Texas, Louisiana, Oklahoma and Arkansas, IIR counted 952 planned projects among the various groups it tracks, the most since at least 2010 and a 24 percent increase from this year.
A recent survey conducted by the Associated General Contractors of America found that 74 percent of Texas contractors are having trouble filling hourly craft worker positions, and a majority of them believed they would continue to struggle over the next year.
More than 60 percent of the respondents said they bumped up salaries to attract more skilled craft workers.
“These shortages have the potential to undermine broader economic growth by forcing contractors to slow scheduled work or choose not to bid on projects, thereby inflating the cost of construction,” said Stephen Sandherr, head of the Associated General Contractors.
US refiners face severe labor shortage for deferred maintenance
US refiners face severe labor shortage for deferred maintenance
World must prioritize resilience over disruption, economic experts warn
- Al-Jadaan said that much of the anxiety dominating markets reflected a world that had already been shifting for years
- Pointing to Asia and the Gulf, Al-Jadaan said that some countries had already built models based on diversification and resilience
DAVOS: Saudi Arabia’s Finance Minister Mohammed Al-Jadaan urged policymakers and investors to “mute the noise” and focus on resilience, as global leaders gathered in Davos on Friday against a backdrop of trade tensions, geopolitical uncertainty and rapid technological change.
Speaking on the final day of the World Economic Forum in Davos, Al-Jadaan said that much of the anxiety dominating markets reflected a world that had already been shifting for years.
“We need to define who ‘we’ are in this so-called new world order,” he said, arguing that many emerging economies had been adapting to a more fragmented global system for decades.
Pointing to Asia and the Gulf, Al-Jadaan said that some countries had already built models based on diversification and resilience. In energy markets, he pointed out that the focus should remain on balancing supply and demand in a way that incentivized investment without harming the global economy.
“Our role in OPEC is to stabilize the market,” he said.
His remarks were echoed by Saudi Arabia’s Minister of Economy and Planning Faisal Alibrahim, who said that uncertainty had weighed heavily on growth, investment and geopolitical risk, but that reality had proven more resilient.
“The economy has adjusted and continues to move forward,” Alibrahim said.
Alibrahim warned that pragmatism had become scarce, trust increasingly transactional, and collaboration more fragile. “Stability cannot be quickly built or bought,” he said.
Alibrahim called for a shift away from preserving the status quo towards the practical ingredients that made cooperation work, stressing discipline and long-term thinking even when views diverged.
Quoting Saudi Arabia’s founding King Abdulaziz Al-Saud, he added: “Facing challenges requires strength and confidence, there is no virtue in weakness. We cannot sit idle.”
President of the European Central Bank Christine Lagarde stressed the importance of distinguishing meaningful data from headline noise, saying: “Our duty as central bankers is to separate the signal from the noise. The real numbers are growth numbers not nominal ones.”
Managing Director of the IMF Kristalina Georgieva echoed Lagarde’s sentiments, saying that the world had entered a more “shock prone” environment shaped by technology and geopolitics.
Director General of the World Trade Organization Ngozi Okonjo-Iweala said that the global trade systems currently in place were remarkably resilient, pointing out that 72 percent of global trade continued despite disruptions.
She urged governments and businesses, however, to avoid overreacting.
Okonjo Iweala said that a return to the old order was unlikely, but trade would remain essential. Georgieva agreed, saying global trade would continue, albeit in a different form.
Georgieva warned that AI would accelerate economic transformation at an unprecedented speed. The IMF expects 60 percent of jobs to be affected by AI, either enhanced or displaced, with entry-level roles and middle-class workers facing the greatest pressure.
Lagarde warned that without cooperation, capital and data flows would suffer, undermining productivity and growth.
Al-Jadaan said that power dynamics had always shaped global relations, but dialogue remained essential. “The fact that thousands of leaders came here says something,” he said. “Some things cannot be done alone.”
In another session titled Geopolitical Risks Outlook for 2026, former US Democratic representative Jane Harman said that because of AI, the world was safer in some ways but worse off in others.
“I think AI can make the world riskier if it gets in the wrong hands and is used without guardrails to kill all of us. But AI also has enormous promise. AI may be a development tool that moves the third world ahead faster than our world, which has pretty messy politics,” she said.
American economist Eswar Prasad said that currently the world was in a “doom loop.”
Prasad said that the global economy was stuck in a negative-feedback loop and economics, domestic politics and geopolitics were only bringing out the worst in each other.
“Technology could lead to shared prosperity but what we are seeing is much more concentration of economic and financial power within and between countries, potentially making it a destabilizing force,” he said.
Prasad predicted that AI and tech development would impact growing economies the most. But he said that there was uncertainty about whether these developments would create job opportunities and growth in developing countries.
Professor of international political economy at the University of New South Wales in Australia, Elizabeth Thurbon, said that China was driving a Green Energy transition in a way that should be modeled by the rest of the world.
“The Chinese government is using the Green Energy Transition to boost energy security and is manufacturing its own energy to reduce reliance on fossil fuel imports,” she explained.
Thurbon said that China was using this transition to boost economic security, social security and geostrategic security. She viewed this as a huge security-enhancing opportunity and every country had the ability to use the energy transition as a national security multiplier.
“We are seeing an enormous dynamism across emerging market economies driven by China. This boom loop is being driven by enormous investments in green energy. Two-thirds of global investment flowing into renewable energy is driven largely by China,” she said.
Thurbon said that China was taking an interesting approach to building relationships with countries by putting economic engagement on the forefront of what they had to offer.
“China is doing all it can to ensure economic partnership with emerging economies are productive. It’s important to approach alliances as not just political alliances but investment in economy, future and the flourishment of a state,” she said.
The panel criticized global economic treaties and laws, and expressed the need for immediate reforms in economic governing bodies.
“If you are a developing economy, the rules of the WTO, for example, are not helpful for you to develop. A lot of the rules make it difficult to pursue an economic development agenda. These regulations are not allowing the economies to grow,” Thurbon said.
“Serious reform must be made in international trade agreements, economic bodies and rules and guidelines,” she added.
Prasad echoed this sentiment and said there was a need for national and international reform in global economic institutions.
“These institutions are not working very well so we can reconfigure them or rebuild them from scratch. But unfortunately the task of rebuilding falls into the hands of those who are shredding them,” he said.
WEF attendees were invited to join the Global Collaboration and Growth meeting to be held in Saudi Arabia in April 2026 to continue addressing the complex global challenges and engage in dialogue.
