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Charlotte Amalie
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HomeNewsLocal newsCrude Prosperity: Hess Oil on St. Croix (Part Five)

Crude Prosperity: Hess Oil on St. Croix (Part Five)

A New York Times article from August 1979 reports on Leon Hess breaking ground on the building of the Hess oil refinery on St. Croix, noting that residents were skeptical of the tax breaks the company received. (Press clipping from the New York Times)

Author’s Note: St. Croix, once more, stands at a crossroads. The present situation appears unworkable, the path forward uncertain. It is not, however, the first time St. Croix has stood at such a precipice. This historical six-part series explores three moments in the past century – VI Corp, Harvey Aluminum, and Hess Oil – where frustration with the given situation boiled over into radical change. Breaking with the past, a better future for St. Croix was declared, a new foundation laid. These decreed Crucian futures sometimes aligned with the people and sometimes overrode the people. Today, Limetree comes into view at just such a crossroads, and once more the future of St. Croix is up for grabs. 

Crude Prosperity: Hess Oil on St. Croix (Part Five) 

Give me the quota and I’ll break ground for a petrochemical plant in a helluva hurry,” Leon Hess told island officials and federal regulators in 1967. It was a promise he intended to keep, and by 1970 Hess was well on his way to building a refinery with a rocket-like ascent.

Hess set up shop in the Virgin Islands at a most opportune time. As American production of crude oil started fading in the late 1960s, domestic consumption skyrocketed. The resulting embrace of imports meant supertankers became more important than pipelines in meeting the U.S. energy needs. As Leon Hess never tired of pointing out, it was far cheaper to ship petroleum to NYC from St. Croix than from Houston. And the territorial status of St. Croix provided advantages that Houston could never match.

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Within a decade, Hess was operating the largest refinery and petrochemical plant in the world on the south shore of St. Croix. The sprawling scale of this mega-refinery is matched only by its relative neglect in popular and scholarly understandings of the Virgin Islands.

The U.S. Virgin Islands, based solely on the scale of this mega-refinery, was routinely listed as one of the top 10 sources of oil imported to the United States. For most of the past 50 years, “America’s Paradise” in the Lesser Antilles operated as a major axis of the energy network of the Atlantic Seaboard. The difficulties imagining St. Croix as the gas station to the East Coast was part of its advantage. The Hess operation in Krause Lagoon provided millions of Americans with cheap fuel without ever having to think too much about the costs.

Gov. Ralph M. Paiewonsky welcomed Harvey Aluminum and Hess Oil to St. Croix with open arms in the 1960s, believing only the wages of industry could emancipate the island from the “plantation economy” of its past. However, the arrival of aluminum processing and oil refining did not so much break with colonialism as deepen the islands reliance on – and relative distance from – the mainland. The secondary status of the Virgin Islands itself became one the most enticing features to recruit and retain industry.

Word has gotten around Wall Street that corporations can get a businessman’s deal in the Virgin Islands,” wrote the Virgin Islands Industrial Incentive Board in 1966. Industry was granted an autonomy unavailable in the U.S. proper, the Industrial Incentive Board explained, as the Virgin Islands offered few restrictions and even less peeking over the shoulder” at a company’s operations. Tax law, worker’s rights, and environmental protections all proved more pliable in these Caribbean waters than on the mainland, a fact that Hess Oil and Government House both came to count on.

Industry’s early years on St. Croix were turbulent. Beyond beating back the protests of farmers, both Harvey and Hess skirted promises made to their workers. It was a lapse that soon sparked a resurgence of that great Crucian pastime: organizing a strike. Again and again, operations at Harvey Aluminum and Hess Oil were brought to a standstill by worker demands in the late 1960s. “Labor Unrest Plagues St. Croix South Shore,” ran a 1968 headline of the Daily News. Forgoing promises to hire locally, both Harvey and Hess sought to circumvent labor militancy by hiring workers from elsewhere. By 1968, a guest worker program accounted for over half of all workers on island (a figure that rose to 95% of workers in the construction boom that built the refinery). Arriving from Antigua, Barbados, and Trinidad and housed in guarded barracks, Hess trained these “bonded aliens” in the ease with which they could be deported if they caused any trouble.

But the wages were sterling. And the down islanders and men from the mainland who found steady work at the refinery soon prospered into a new middle class on St. Croix. By 1972, payroll at the Hess refinery edged out the wages of the tourism sector. With handsome paychecks, refinery workers encouraged new shops, new restaurants, and new houses on St. Croix to fit their tastes. Amid complaints of overcrowded public schools, Hess bankrolled the St Croix Country Day School purchase of Estate Good Hope. Such benevolence was not disinterested: refinery workers wanted private educational opportunities for their children.

Even as it grew to record-breaking size, Hess Oil never employed more than a sliver of residents in the Virgin Islands. In fact, Leon Hess bragged of his ability to run the plant with fewer men than would be required elsewhere. The refinery, however, redefined the nature of work in the territory. On paper, the petro-fueled economy of the USVI flourished into one of the richest in the entire Caribbean. Yet GDP is a poor measure of shared prosperity, and in the 1970s St. Croix faced spiking unemployment among Crucians as agriculture collapsed and heavy industry preferred guest workers.

Flush with revenue, the territorial government started hiring. During the late 1970s, one report found 75% of new jobs on St. Croix were in government, and by 1980 roughly half of the native population of St. Croix found gainful employment in proliferating public agencies. These government salaries provided another route into the middle class for many Crucians, yet it introduced an uncomfortable divide within modest Black prosperity on St. Croix: while industry preferred down-island workers, government preferred native Crucians.

As is so often the case, such fiscal wealth came at tremendous ecological cost. Concerns over pollution accompanied Hess Oil from the moment it arrived in Krause Lagoon. In 1972, the New York Times reported on frustration over “air and water pollution” and “spiraling food costs” that locals associated with the arrival of the refinery. By the early 1980s, so much oil had leaked from the refinery that an oil slick some 10 feet thick floated on top of the island’s only aquifer. At one point, construction workers on the south shore stood back in surprise as a geyser of crude oil shot out of the hole they were digging. A local newspaper reported that they thought they’d hit it big until the dismal reality of the situation became clear: they had tapped into a shockingly large plume of petrochemicals flowing from the refinery.

Hess Corporation’s online timeline makes no mention of the environmental degradation the company caused on St. Croix while operating the refinery. (Screenshot from company website)

Over the years, Hess Oil routinely offered up public health as a reasonable price to ensure operational ease and corporate returns. Retired workers told me stories of venting carcinogenic petrochemicals under the cover of night during the 1980s. This, on an island where residents still get their drinking water from cisterns. Hess was decades late in setting up a basic emissions reporting system, but when it finally did in 1989 the results were appalling. Hess Oil disclosed it had released 700,000 pounds of toxic benzene the previous year. (The company later revised that figure to just under half a million pounds). In so many ways, contamination was built into the very design of the plant.

In government accounting, Hess Oil became the economy of the Virgin Islands. The astronomical wealth that passed through its enclave operations in Krause Lagoon dwarfed the revenue streams from every other sector in the Virgin Islands. This fundamental economic fact tilted the political center of gravity on St. Croix away from the feud of farmers (country) and merchants (city) and towards the new fault-lines of an emerging middle class. It also installed suburban consumption at the heart of St. Croix and swelled the territorial government into a modern civic bureaucracy and Crucian employment agency. But dependency on one firm meant this uplift of the Virgin Islands economy could only proceed in cultivated ignorance of its narrow corporate base and broad ecological cost.

As the Virgin Islands became a more fulsome democracy, with a government that finally looked like the people governed, the territory’s economy became markedly less diverse. This contradiction conjured the very past believed to be overcome, for not since the days of the plantation had these islands rested so much on the promissory note of a single commodity. And just as the spectacular wealth of sugar came at the price of enslaved bodies sacrificed to ease European consumption, the spectacular wealth of oil came at the price of colonized landscapes sacrificed to ease America’s addiction to fossil fuels.

Unfortunately, the Virgin Islands were far from unique in this complicated embrace of oil refining. Although Leon Hess may have done it on a far grander scale here, the story of oil refining in St. Croix is also the story of the contemporary Caribbean.

Oil in the Caribbean
During the 20th century, the Caribbean became a global hub of oil refining. This cardinal economic realignment remains underappreciated in scholarly and popular understandings of the region. As the Panama Canal brought new shipping lanes to the region and as European navies and trading concerns retrofitted their fleets to run on petroleum, oil refineries were built across the Caribbean in 1930s and 1940s. Unlike their European and American counterparts designed to serve adjacent urban markets, these Caribbean refineries were sized to the oceanic merchant and military networks they supported.

During World War II, the Royal Dutch Shell refinery on Curaçao became the largest refinery in the world, followed closely by Standard Oil of New Jersey’s refinery on Aruba. These two massive Caribbean refineries provided over 70 percent of the Allies’ aviation and naval fuel and attracted concerted attacks from German U-boats. Many of these early Caribbean refineries were designed to process Latin American crude oil within colonies controlled by Europe. As European influence waned in the Caribbean, the United States stepped in.

An oil refinery on the island of Aruba (Shutterstock)

Oil production in the United States peaked in 1970 (until fracking reversed the downward trend around 2010). A hemispheric event, peak oil in the U.S. helped transform Caribbean refineries into an imperial circuit of the United States energy grid. After World War II, abundant reserves of oil in California and Texas underwrote a new American Dream of cheap food, big cars, and suburban ease. As the domestic flow of crude started sputtering in the 1960s and 70s, the nation faced a dilemma: either recognize natural limits or compel oil from elsewhere.

In the 1970s, the United States debated whether to redesign American life around alternative sources of energy, efficiencies achieved through public investments in building design and transportation and drastically curtailed military expenditures of fuel (all of which were key platforms of the first Earth Day in 1970). Or, in the other direction, whether to throw the weight of the federal government into a more imperial pursuit of foreign oil. President Richard Nixon, opting for the latter, helped deepen the American addiction to fossil fuels far beyond what the country itself could provide.

In 1955, roughly 90% of the petroleum consumed in the United States came from domestic sources. By 1977, nearly half of the gasoline, jet fuel, and heating oil consumed in the US came from foreign oil. This rising American dependence on foreign oil transformed the Caribbean into the premier refining hub of the eastern United States. From 1970 onward, half of the crude oil imported to the US arrived on supertankers that passed through the Caribbean. With domestic refineries hedged in by urban sprawl and new emission limits, American oil companies realized the exceptional advantage of the Caribbean. And soon Tesoro, Sun Oil, Gulf Oil, Union Carbide, Philips Petroleum, Hess Oil, and others were fast at work building new enclave refineries in the Caribbean.

Between 1950 and 1990, oil refineries became the largest site of capital investment in the Caribbean, a leading source of state revenue, and one of the region’s largest employers, especially during the construction boom of new refineries in the late 1960s and early 1970s. This petro-boom renovated older refineries in Aruba, Curaçao, and Trinidad and built new entrepot refineries in Antigua, the Bahamas, Puerto Rico, and the Virgin Islands. Accepting delivery of oil from the Middle East, Africa, and Latin America, these refineries only processed crude in one direction: north to US markets. By some estimates, in the 1980s one out of every six gallons of gasoline sold in the United States had been refined in the Caribbean.

As one book noted of these trends in 1984, “The Caribbean has been highly regarded as a refining center because of its political stability, its deep harbors, its lack of environmental regulations, and its proximity to major shipping lanes.” But we might sharpen the point. In the 1970s, the Caribbean found itself recast as an imperial outpost of American energy: close enough for the U.S. to monopolize the gain but far enough away to avoid any real responsibility for the problems.

The World Bank and other international organizations actively encouraged Caribbean states to welcome this new “enclave-type” processing of petroleum products for export to the United States as a crucial step in modernizing Caribbean economies. Sidney Chernick, the World Bank’s Chief of Mission to the Caribbean, authored a plan for regional development that pivoted on entrepot refineries remaking the Caribbean. While Chernick acknowledged that “little value” might accrue locally, he argued that the most lucrative payoff might be the discipline such industry imposed upon Caribbean societies. “To encourage enclave exports is not inconsistent with taking longer-term steps to transform the structure of the economy by developing stronger internal behavior.”

It was a point previewed a decade earlier by Secretary of the Interior Stewart Udall when celebrating the opening of a new entrepot refinery in Puerto Rico in 1967. Perhaps the greatest export of this plant, Udall said, was not the cheap petroleum it provided for the mainland but the inspiring economic model it provided to the Caribbean. Such is the ideology of empire. It is now well understood how the immense profits of Caribbean sugar underwrote the rise of European empires four centuries ago. Perhaps a similar story might now be told about the role of Caribbean refining in fueling the contemporary empire of oil in the United States.

Part six of this six-part series will further discuss Hess Oil’s impacts on the island of St. Croix. 

The First Green New Deal (Part 1)

The First Green New Deal (Part 2)

Manufactured Progress: Harvey Aluminum on St. Croix (Part 3)

Manufactured Progress: Harvey Aluminum on St. Croix (Part 4)

David Bond teaches anthropology at Bennington College. He researched the Hovensa refinery in 2010 and 2011 and has written on how the history of the refinery informs the present struggle for justice on St. Croix.

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