Marathon Petroleum Corporation is slashing its workforce as the largest independent U.S. oil refiner adjusts to gasoline demand that’s showing no sign of recovering to pre-pandemic levels.
The idling of refineries in Martinez, California, and Gallup, New Mexico, plus others measures including cuts at the company’s headquarters will affect about 2,050 employees, Findlay, Ohio-based Marathon said Wednesday in a filing. The job cuts and open positions that Marathon won’t now fill represent about 12 per cent of its overall workforce.
The move reflects the hit taken by the global refining industry, which has been left with a capacity glut as consumers work from home and airlines operate at a fraction of their former flight schedule. With Covid-19 cases increasing in some parts of the U.S. and Western Europe, it’s unclear how or when consumption might improve in the months ahead.
Refiners “are really bleeding right now,” Robert Campbell, head of global oil products markets for London consultancy Energy Aspects, said in an interview. “We are on track for gasoline demand to be down 10 per cent year on year for the fourth quarter.”
Marathon, with more than 3 million barrels a day of capacity, previously laid off some employees in the spring and began running its refineries at reduced rates to stem losses after the fuel market contracted.
The company announced in August it would convert Martinez, with a capacity of 166,000 barrels a day, into a terminal facility, and that it may add a renewable diesel plant at the sit. The company is also turning its 19,000 barrel-a-day Dickinson, N.D., facility into a renewable diesel plant by the end of 2020.
Marathon is forecast to lose $798 million in the third quarter, according to the average of analysts’ estimates. It said Wednesday it will take a charge of as much as $175 million for the period related to severance and employee-benefit expenses. Certain of the affected employees provide services to MPLX LP, a pipeline company in which Marathon holds a controlling interest. Marathon said MPLX will reimburse it for up to $35 million of those expenses.
In March, Marathon announced the sale of its Speedway chain of gas stations to 7-Eleven Inc. for $21 billion.
© 2020 Bloomberg L.P.