Fuel Hedging
11-25-2015, 07:04 AM
#3
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Joined APC: Mar 2015
Posts: 43
Originally Posted by tom11011
Why would Delta have such a large loss considering they own their own refinery?
PS: my guess, they still hedge on oil prices. So it doesn't really matter that they own a refinery really. All that means is that they can make their own gas. When they get locked into a higher price, and prices drop, they are still forced to pay the difference. Just a thought... I'm a dumb pilot though.
11-25-2015, 07:44 AM
#5
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Joined APC: Dec 2009
Position: Narrow/Left Wide/Right
Posts: 3,655
Originally Posted by MTSblue
Why would Delta own a refinery?
PS: my guess, they still hedge on oil prices. So it doesn't really matter that they own a refinery really. All that means is that they can make their own gas. When they get locked into a higher price, and prices drop, they are still forced to pay the difference. Just a thought... I'm a dumb pilot though.
PS: my guess, they still hedge on oil prices. So it doesn't really matter that they own a refinery really. All that means is that they can make their own gas. When they get locked into a higher price, and prices drop, they are still forced to pay the difference. Just a thought... I'm a dumb pilot though.
Hedges have nothing to do with owning a refinery.
Refinery is all about controlling the crack spread.
Hedges is all about protecting against huge spikes in the price of oil. It's a form of insurance, and like any other, there is a premium to be paid and if you don't need it, it's a cost. It only looks smart in the face of a major spike in oil.
Iran decides to shut down straight of hormuz, or any disruption to the free flow of oil, prices will spike. China somehow wakes up from a short slumber and demand returns, and again prices spike.
Then y'all will be on here wondering why only SWA has taken a 50% hedge at this low price for next years fuel and saying the majors blew an opportunity to lock in lower prices.
Its easy to second guess insurance when nothing happens.
11-28-2015, 07:54 PM
#6
Gets Weekends Off
Joined APC: Aug 2008
Posts: 439
Originally Posted by MTSblue
Why would Delta own a refinery?
PS: my guess, they still hedge on oil prices. So it doesn't really matter that they own a refinery really. All that means is that they can make their own gas. When they get locked into a higher price, and prices drop, they are still forced to pay the difference. Just a thought... I'm a dumb pilot though.
PS: my guess, they still hedge on oil prices. So it doesn't really matter that they own a refinery really. All that means is that they can make their own gas. When they get locked into a higher price, and prices drop, they are still forced to pay the difference. Just a thought... I'm a dumb pilot though.
11-30-2015, 01:30 PM
#9
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Joined APC: Jul 2009
Position: Lowest Pay I Could Find
Posts: 1,044
Originally Posted by Seaslap8
DAL paid approx. $150M for the refinery in 2012, and they reported a $105M profit from the refinery in the last quarter alone...I think that is why.
11-30-2015, 02:43 PM
#10
Banned
Joined APC: Dec 2009
Position: Narrow/Left Wide/Right
Posts: 3,655
Originally Posted by Seaslap8
DAL paid approx. $150M for the refinery in 2012, and they reported a $105M profit from the refinery in the last quarter alone...I think that is why.
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