According to The Wall Street Journal, Delta Air Lines has invested $180,000,000.00 on the acquisition of the oil refinery, plus an additional $100,000,000.00 on upgrades and improvements aimed at maximizing the production of jet fuel — yet it expects to save approximately $300,000,000.00 per year, meaning that the oil refinery will pay for itself within a year, plus a twenty million dollar surplus.
Delta Air Lines consumes between 260,000 and 300,000 barrels of jet fuel per day worldwide and reportedly spent $11,800,000.000.00 — yes, that is $11.8 billion — on jet fuel in 2011. The oil refinery is expected to eventually produce 52,000 barrels of jet fuel per day, with 70 percent of the output of the oil refinery producing such refined products as gasoline and diesel fuel, which will be traded with certain oil companies in exchange for additional jet fuel. Jeffrey Warmann, who is the chief executive officer of Monroe Energy LLC, reportedly said that Delta Air Lines “expects to realize a 12-cent-per-gallon price advantage over competitors, while hedging strategies have historically produced only a two-cent price advantage.”
Was its purchase of an oil refinery a brilliantly successful move by Delta Air Lines? It initially appears to be so but remains to be seen over the long run — but it has reportedly prompted Jeff Smisek, who is the chief executive officer of the parent company of United Airlines, to consider purchasing an oil refinery.