Delta appears to be considering Conoco’s Trainer refinery as the solution to a perennial problem — how to hold down its expenditures on jet fuel. The carrier spent $3 billion more on fuel last year than it did in 2010, and prices continue to soar.
John Parry is a principal analyst with energy research firm IHS Herold. Parry says that buying the refinery would enable Delta to produce its own jet fuel at substantially less cost than either buying fuel on the open market or building a refinery from scratch.
“But the refinery will probably need some investment. And the rationale for buying it is certainly suspect, because you don’t just produce jet fuel from a refinery. Probably 80% of the product that you produce is, are things other than jet fuel. You’d be in the refining business which, at least on the Eastern Seaboard, has been very uncompetitive.”
Less than seven years ago, a spike in fuel prices helped drive Delta into Chapter 11 bankruptcy.