Delta interested in buying an oil refinery?

[HalinTexas]

Little difference between Kerosene, #1 diesel and Jet A from a refining standpoint, although they are not necessarily interchangeable.

DAL maybe looking for some control over the retail (refined) price of Jet A, not so much as an investment opportunity. If they are the largest customer for Jet A, they can get it for cost, effectively and without getting into detail, and sell the rest. If they can get cheaper (or less volatile) price on Jet A and their refinery doesn't lose money, they win. Hopefully, this isn't a boon-doggle.

 

[JimNtexas]

Most MBA's would say that an airline has no business buying an oil refinery, since that's out of their 'core competence'. Conventional wisdom is to just have marketing and finance in the US, outsource software and customer contact to India, hardware to China. Hire on 1099s. Take no risks.

But then I look at SpaceX, who outsources almost nothing and is able to make rocket ships at a cost substantially less than even China can match.

It may be that Delta is right to bring more of its costs under its own roof after all.

And I don't buy the 'it's impossible because nobody has done it' argument.

 

[redflyer65]

And I don't buy the 'it's impossible because nobody has done it' argument.

I completely agree. I say..


Full Steam Ahead.

 

[Andy]

Little difference between Kerosene, #1 diesel and Jet A from a refining standpoint, although they are not necessarily interchangeable.

Thank you! I was tempted to post that in response to JimNTexas' original question. The biggest difference from a refinining standpoint is that Jet A has a slightly shorter carbon chain than diesel.
I don't know all of the additives that are put in each after refining but diesel isn't going to need the same amount of FSII as Jet A. And from reading others' posts, it appears that Jet A doesn't have as many lubricant additives as diesel. This article confirms additional lubricant additives in diesel fuel: http://www.ehow.com/facts_5808896_difference-jet-fuel-diesel-fuel_.html

Both Jet A and diesel can be refined from heavy or light crude.

The problem with heavy crude is that it has a longer carbon chain than light crude so that it requires more refining than light crude.

As to the wisdom of an airline acquiring a refinery, I'll defer to those in the oil industry. http://www.foxbusiness.com/industries/2012/04/06/is-refinery-ownership-key-to-airline-fuel-woes/

 

[redflyer65]

Excellent article Andy. I find it really interesting that people who actually run and operate refineries like these are losing money....and have been doing it for years, on these very sites.

Part two of the story...no other operators want them either. I would say that makes it a questionable venture at best..

Theoritically speaking, if Delta did buy the refinery how would they change of equation of it still being a money loser? These refineries require light sweet crude. There is none in the area. Maybe they have a different plan, could be interesting to watch if they pull the trigger.

 

[Dan Roman]

Funny, as an outsider looking in I was going to say I see it the other way around.

Then I read the second part of your post, and see that it is not just as I see it but it is fact.

An outsider looking in? Your whole focus on here is pro SWA and trying to make DAL RJ pilots look like inexperienced rookies trying to steal mainline flying. You are obviously a SWA pilot in the same vain as Tankerclown, that version of SWA pilot tried to make Air Force tanker pilots look like idiots while he attacked DAL.

As was said, the whole "my airline can beat up your airline" crap is juvenile and pretty much makes pilots on here appear to be over grown kids who would struggle in the real world.

 

[Dan Roman]

Nice to see all the experts on oil refining on here, you guys may have missed your calling.
I heard SWA is going to retaliate by buying a peanut factory to keep costs down?

 

[Freebrd]

What is all this ******************** against Delta from the SWA guys on this forum. hand.

Go wayyyyyy back and you'll see that weenie Jenny Leigh and the other one, OysYoYo started slamming SWA in addition to stirring it up on the regional board as well. PUTZ!

 

[redflyer65]

An outsider looking in? Your whole focus on here is pro SWA and trying to make DAL RJ pilots look like inexperienced rookies trying to steal mainline flying.QUOTE]

I'd say he's probably getting tired of being treated like a second class citizen at Mother Delta and my see a pretty big difference if hired at SW.

Oh, and he admits he didn't steal anything, he thanks you for the outsourced flying. Food on the table and all that stuff.

Full Steam Ahead Gentleman!

 

[ASADFW7]

Please debate the topic.