Delta Buys Oil Refinery
Here's one way to deal with the exorbitant price of crude-oil based fuel: screw the oil majors and buy your own refinery. That's what Delta Airlines has, apparently, done. The airline will buy a Pennsylvania oil refinery from ConocoPhillips for $180 million, to save money on fuel costs by investing in a downstream sector that oil majors avoid. Atlanta-based Delta said the first-ever purchase of a refinery by an airline would allow it to cut $300 million annually from jet fuel costs, which reached $12 billion last year. It said production at the refinery along with other agreements to exchange refined products for jet fuel would provide 80% of its fuel needs in the United States.
While Delta will remain hostage to fluctuating crude oil costs, the facility would enable it to save on the cost of refining a barrel of jet fuel, which is currently more than $2 billion a year for Delta and has been rising in the wake of U.S. refinery shutdowns, said Delta Chief Executive Richard Anderson.