Delta (Air Lines) buys a refinery in bid to cut its fuel bill
Source: AP-Excite
By JOSHUA FREED
Delta Air Lines is buying a refinery in a novel - and some say risky - attempt to slice $300 million a year from its escalating jet fuel bill.
The Atlanta airline said Monday that is buying the Trainer, Pennsylvania refinery near Philadelphia for $150 million from Phillips 66 (PSXWI), a refining company being spun off from ConocoPhillips. (COP) The refinery has struggled to make money, and ConocoPhillips planned to shut it down if it couldn't find a buyer.
So why is Delta buying it?
Fuel has become the largest and most volatile expense for most airlines, including Delta. U.S. airlines paid an average of $2.86 a gallon for jet fuel last year, up from $2.09 in 2007, according to the Bureau of Transportation statistics. Nobody likes to see the price of gas climb, but for airlines consuming billions of gallons a year, it can be downright crippling. Consider this: Delta's planes burned through 3.9 billion gallons of fuel last year, costing the airline $11.8 billion - 36 percent of its operating expenses.
Read more: http://apnews.excite.com/article/20120430/D9UFHHI03.html
Fearless
(18,421 posts)Where can I find a jet fuel powered car!
Psephos
(8,032 posts)This year's is considerably more.
Fearless
(18,421 posts)Psephos
(8,032 posts)Prices are based on Platts data (a reliable source for energy prices).
2012 average price so far is $135.1/barrel. 1 barrel holds 42 gallons. $135.1/42 rounds to $3.22/gallon.
Fearless
(18,421 posts)Still cheaper than gas here... Looks like I know my next investment!
Psephos
(8,032 posts)By the way, the price difference is largely due to two things. 1) Taxes, and 2) the fraction of crude petroleum that is made into Jet A is less economically valuable. Jet A is essentially fancy kerosene.
Fearless
(18,421 posts)harun
(11,348 posts)2on2u
(1,843 posts)will be an option someday.... perhaps they could help push this forward in some way.
aggiesal
(8,916 posts)I'm willing to bet that ticket prices will NOT go down.
Pilots, Flight Attendants & Mechanics will still not be
allowed to start a union.
Or, if they already have a union, they will try to bust it.
Sabriel
(5,035 posts)Heck, why not my own gas station?
It's nice that airlines have enough money that they can just buy their own supply infrastructure.
There's something very Mad Max-ish about that article. And that scares me.