U.S. News
Union Dockworkers Strike Threatens U.S. Economy as Biden Resists Intervention
Clear Facts
- The union dockworkers strike began on Tuesday, affecting 36 East and Gulf Coast ports in the U.S.
- Experts suggest the oil and gas industry won’t be immediately impacted but could face significant disruptions if the strike continues.
- Various business groups are urging President Biden to intervene, but he has stated he does not support using the Taft-Hartley Act to end the strike.
The recent strike by union dockworkers has sent ripples through the U.S. economy, with potential long-term consequences for the oil and gas industry. Although the Department of Energy has assured that the strike “will not impact crude oil, gasoline, natural gas, and other liquid fuel exports and imports” immediately, experts warn that this situation could change if the strike persists.
Adam Ferrari, CEO of Phoenix Capital Group, emphasized the broader economic implications.
“While you can say there might not be an ‘immediate’ impact, there is still the consideration of the overall economic hit the US will take across all industries, including the oil and gas industry,” Ferrari stated.
The East and Gulf Coast ports account for about half of U.S. container imports. If the strike drags on, the entire supply chain, including the oil and gas sector, could face significant disruptions. Ferrari pointed out that the labor involved in loading and unloading natural gas products could be disturbed, leading to potential shortages and price hikes.
“This is a domino effect,” Ferrari stated.
“Increased gas prices could also lead to fluctuations in stock prices and investor and market uncertainty. In turn, it could also impact government regulation and policies, of which already have existing tensions within this sector.”
Phil Flynn, an energy market analyst, highlighted another angle in his daily report.
“Oil tankers and LNG will not be impacted as the Longshoremen strike is impacting container ships, but when those ships don’t move they will not burn oil,” Flynn wrote.
“The possibility that factories may shut down because of the strike will also reduce demand for oil and could lead to a larger US recession, further hampering demand.”
The International Longshoremen’s Association (ILA) initiated its first strike since 1977 after failing to reach a new agreement with the U.S. Maritime Alliance (USMX). The deadlock centers around demands for wage hikes, compensation, and protection from automation at ports.
Several industries are already feeling the pinch, prompting trade groups to call on President Biden to step in. Organizations such as the National Retail Federation (NRF) and the U.S. Chamber of Commerce have urged the President to use his authority under the Taft-Hartley Act to resume port operations.
However, President Biden has made it clear he does not support this approach.
“I don’t believe in Taft-Hartley,” he said over the weekend.
The strike affects seaports from Maine to Texas, which handle about half of U.S. imports and are crucial for American exports. An analysis by JPMorgan estimated the daily economic cost of the strike could range from $3.8 billion to $4.5 billion. However, Anderson Economic Group (AEG) offers a more conservative estimate of $2.1 billion for the first week.
Patrick Anderson, principal and CEO of AEG, noted that the strike’s duration might hinge on whether the Biden administration decides to intervene, a move the President has so far resisted.
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