Originally Posted by
Wasatch Phantom
In addition to dealing with the fluctuation in the cost of of oil, the "crack spread" fluctuates as well. (crack spread is essentially the differential between the price of crude oil and, in this case, Jet A).
I recall that when Katrina rolled through MSY the price of crude went up significantly, but the crack spread skyrocketed.
By owning a refinery you can eliminate that variable and when you consider how much Jet A Delta buys, it may be a very wise purchase.
The best way to manage your supply chain is to own it.
I knew a restaunteer who had probably two dozen restaurants and he bought most his suppliers. Works for WB's Berkshire Hathaways companies too. I think Netjets owns their supply chain, although I know ponzi schemes aren't a great analogy but still.
For an airline to do this, brilliant. Hope they do it. But I bet we'd really start to tanker out of the hubs!
