Delta Buys Penn. Oil Refinery

Delta Air Lines, Inc. will purchase a Pennsylvania oil refinery from ConocoPhillips for $150M, in a bid to save money on fuel costs by investing in a sector frowned upon by most of the biggest oil firms.  Delta said the first ever purchase of a refinery by an airline would allow it to cut $300M annually from jet fuel costs, which tallied out at $12B  last year alone.  The Atlanta-based company stated that production at the refinery along with other agreements to exchange refined products for jet fuel would provide 80% of its fuel needs in the United States.

The idle refinery, based in Trainer, PA., deal came in the nick of time, as politicians and officials feared thousands of lost jobs in the area if the plant was shut down permanently.  The plant can refine, at peak, 185,000 barrels per day.  While the purchase price of the refinery was the cost of a wide-body jet liner, even including an additional $100M to upgrade the plant the plant to maximize jet fuel production, it will put Delta in the position of hoping that the recent rebound in refinery profit margins–an indication of added costs for a fuel consumer–doesn’t prove too fleeting.

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