West Coast Oil Refiners and Marketers Face Uncertain Futures Amid Mergers

Strategic Insights -

Thousands of employees in the West Coast oil refining and marketing industry are bracing for job uncertainty as several major mergers and acquisitions loom. The largest planned change is the sale of Unocal Corp.'s downstream West Coast assets to Tosco Corp., which is expected to result in job eliminations. However, Tosco has yet to reveal who will stay and who will go. Meanwhile, Ultramar Diamond Shamrock Inc. has already begun to move some staff from its Long Beach, California, offices to its San Antonio headquarters. Furthermore, a potential downstream merger between Shell Oil Co. and Texaco Inc. is reportedly in negotiation, with observers speculating that it may be announced early in 1997.

Key Takeaways:

  • The sale of Unocal Corp.'s downstream West Coast assets to Tosco Corp. is planned for a February 28 closing, which will result in job eliminations.
  • Tosco will notify Unocal employees of the planned changes before the end of February.
  • Ultramar Diamond Shamrock Inc. has moved some staff from its Long Beach, California, offices to its San Antonio headquarters as part of its merger with Diamond Shamrock.
  • A potential downstream merger between Shell Oil Co. and Texaco Inc. is reportedly in negotiation, with observers speculating that it may be announced early in 1997.
  • Small, independent marketers may have the most to fear from the changes, as the number of product suppliers shrinks and the competition becomes more concentrated.
  • The cost savings of mergers may not be significant enough to alter the competitive balance for refiners, according to one refining executive.
  • Unocal dealers may be glad to shift to Tosco, given the company's electronic funds transfer system has been malfunctioning for about a year, causing inaccuracies in rent and promotional support payments.

Statistics:

  • 3: The number of oceangoing tankers that are part of the Unocal Corp. assets being sold to Tosco Corp.
  • 100,000: The amount of money that Unocal Corp.'s electronic funds transfer system has been unable to account for, leading to inaccurate payments to dealers.
  • 1997: The year in which a potential downstream merger between Shell Oil Co. and Texaco Inc. may be announced.
  • 2.28: The closing date for the sale of Unocal Corp.'s downstream West Coast assets to Tosco Corp.

Sources:

  • "Thousands of employees on West Coast awaiting word on mergers" from an unidentified source, publication date not specified.