Originally Posted by
BenderRodriguez
Not hedging has been Dougie's strategy, and right now he looks like a genius. But what if the price goes up? It's not really gambling, but more like insurance. I have no problem with it personally. It's just a cost of doing business when you spend the kinds of money we do on fuel. Sometimes you are the windshield, sometimes you're the bug. We own a refinery. We are on the other side of that table now.
The refinery doesn't insulate us from the cost of crude to refine though. It just insulates us from the crack spread which isn't much right now. Still a good move in my opinion over the long term as oil will eventually go higher and crack spreads will increase.
I'll bet if we saw the average fuel cost over the last decade between Delta which hedges and AA which does not, they would be very close. Not sure on that, but hedging just takes some volatility out of it. We never see the figure on what hedging saves us, just on what we lose when it doesn't save us.