Originally Posted by
gloopy
Isn't the refinery "crude neutral" though?
IOW it doesn't matter what crude is or what we gain or lose on hedges as that is separate from the refinery. Its purpose was to reduce the crack spread/refining costs, and nothing crude does effects that. To that end, isn't it still a success?
If lower oil prices result in lower fuel prices, won't that increase demand for fuel? Won't increased fuel demand result in more fuel needing to be refined? So flooding the market with cheap gas means you have to refine more gas. We now own and control that part of the bottleneck, and control it at a huge discount in our favor.
It was never designed to be an "oil hedge" or to "make a profit" it was done to lower risk and insure a reliable cheap supply. Hasn't it done that wonderfully?
I don't see many companies changing their fuel consumption policies based off cheaper gas. Thus, I think demand will be flat for quite some time. For instance, Delta's ASM's have been relatively flat over the years, while fuel consumption has gone down significantly. I expect that trend to continue as Delta up gauges to larger, more fuel efficient aircraft.
One interesting tidbit in the 2015 flight plan is Delta is limiting CapEx to $3 billion per year.