Originally Posted by
scambo1
Just spitballin here:
DAL is one of the worlds largest users of jet fuel. When you remove the crack spread from the equation, you save a lot of money. If we aren't going to run on waste veggie oil or fischer tropsh and petroleum continues to be the fuel of choice, then this is just a smart vertical integration strategy.
Refineries are capital intensive businesses, but if we are buying one that is already built and which has also been depreciated, it might be like buying MD90s. I have no idea what the hard numbers might be.
Scambo,
I don't have a clue what the numbers are either, but I remember reading a Chevron annual report a number of years ago.
The Chairman's letter discussed the sale of a big refinery and the gist of it was this huge refinery was old, fully depreciated and more of a liability than an asset. The potential environmental clean up costs can be astronomical.