Marathon Petroleum rises 3.4% as BP refinery strike risks boost rival
Company leads negotiations for 26 refiners as BP Whiting workers authorize walkout
Marathon Petroleum shares rose 3.4% to $202.43 on Friday, extending their recent rally as labor disruptions at a rival refinery stoked investor optimism about potential market share gains for the Findlay, Ohio-based refiner.
The stock's advance came after union workers at BP's Whiting refinery in northwest Indiana voted 98% to authorize a strike, putting the largest refinery in the US Midwest at risk of shutdown. The facility processes approximately 435,000 barrels of crude oil daily and supplies gasoline, diesel and jet fuel across the Midwest.
Marathon's elevated role in the industry-wide labor talks adds a layer of strategic importance to the situation. The company is serving as the lead negotiator for 26 US refiners in national pattern bargaining with the United Steelworkers union, which represents approximately 30,000 refinery and chemical plant workers nationwide. The previous three-year contract expired on February 1, though rolling 24-hour extensions have kept operations running at most facilities.
According to Reuters, Marathon has proposed a 15% wage increase over four years combined with a $2,500 signing bonus. The United Steelworkers has neither accepted nor rejected the offer as of early February, maintaining bargaining leverage while keeping the threat of industrial action on the table.
The dual dynamics—potential supply reduction from a BP strike and Marathon's central position in national contract negotiations—created a compelling narrative for investors. BP's Whiting facility, if idled, would tighten regional fuel supplies and potentially boost refining margins for competitors with operational capacity in the Midwest market.
United Steelworkers Local 7-1, which represents over 800 workers at Whiting, has alleged that BP rejected most union proposals and demanded more than 100 job cuts while proposing wage reductions and the elimination of certain bargaining rights. BP has stated it remains focused on reaching a fair agreement and has trained replacement workers as a contingency measure.
The labor dispute highlights broader tensions in the refining sector as companies seek to control costs amid margin pressure, while unions push back against proposals including increased automation and artificial intelligence surveillance in plant operations. The United Steelworkers' national bargaining agenda includes restrictions on AI implementation, alongside demands for significant wage increases and limits on healthcare cost growth.
Marathon's market capitalization stands at approximately $59 billion, with the stock trading at 14.2 times trailing earnings. Analysts have an average target price of $196.56, according to market data, suggesting limited upside from current levels despite today's gain. The company operates 16 refineries across the United States with total throughput capacity of 2.9 million barrels per day, giving it substantial geographic diversification and the flexibility to capitalize on regional supply disruptions.
The refining sector has faced headwinds in recent quarters, with Marathon reporting a 0.8% year-over-year decline in revenue in the most recent quarter despite a 141.2% surge in earnings per share. Profit margins remain relatively thin at 2.2%, underscoring the importance of operational efficiency and any opportunities to boost refining spreads through competitor disruptions.
Jamal Kheiry, a Marathon spokesperson, told reporters that the company is committed to bargaining in good faith to reach a mutually satisfactory agreement. The outcome of negotiations led by Marathon is expected to establish a national pattern contract that other employers, including BP, are likely to follow, amplifying the company's influence over industry-wide labor costs.
The next few weeks will prove critical for both the BP Whiting situation and the broader national contract negotiations. The union's strike authorization at Whiting does not guarantee a walkout, as both parties have continued negotiating under rolling contract extensions. However, the 98% approval vote signals significant worker discontent and increases pressure on BP management to reach a resolution.
For Marathon shareholders, the current environment presents both opportunity and risk. A competitor's supply disruption could provide a temporary boost to margins in the lucrative Midwest market, but Marathon's role as lead negotiator also exposes the company to the potential for industry-wide labor actions if national talks break down. The stock's 3.4% gain reflects investor optimism that Marathon is positioned to benefit more from the situation than it risks losing.