Airlines Benefit From Drop In Jet-A Refining Costs | Aero-News Network
Aero-News Network
RSS icon RSS feed
podcast icon MP3 podcast
Subscribe Aero-News e-mail Newsletter Subscribe

Airborne Unlimited -- Recent Daily Episodes

Episode Date

Monday

Tuesday

Wednesday

Thursday

Friday

Airborne On ANN

Airborne 09.26.16

Airborne 09.27.16

Airborne 09.28.16

Airborne 09.29.16

Airborne 09.30.16

Airborne Hi-Def On YouTube

Airborne 09.26.16

Airborne 09.27.16

Airborne 09.28.16

Airborne 09.29.16

Airborne 09.30.16

Tue, Mar 17, 2009

Airlines Benefit From Drop In Jet-A Refining Costs

"We'll Enjoy It While We Have It"

The recession has been almost uniformly bad news for airlines, but the industry has found one silver lining -- Jet-A fuel is piling up at refineries, causing its price to plummet.

The Fort Worth Star-Telegram reports the cost of refining jet fuel has fallen from about $25.50 per barrel of crude oil a year ago, to an average of $21 in January and $15 in February. One week ago Tuesday, it stood at just $4 a barrel.

For airlines which hedged too much of their 2009 fuel needs at prices which now seem high, the drop in what's called the "crack spread," or the costs of refining, are especially good news. The hedge contracts lock in the cost of the oil per barrel, but not the refining costs. John Heimlich, chief economist for the Air Transport Association, calls the savings for airlines, "significant."

He says refiners who shifted production capacity to jet fuel as auto gasoline consumption declined have now created a glut. "There is a time lag in terms of how quickly they can shift their refining, so you still have a lot of excess inventory," Heimlich said.

A one-dollar drop in refining costs saves the industry an estimated $400 million a year.

But, noting the crack spread rose suddenly to $60 per barrel after Hurricane Katrina, Heimlich is cautious in his optimism. "We’ll enjoy it while we have it, and take every penny we can get."

FMI: www.airlines.org

Advertisement

More News

Airborne 09.29.16: SpaceX Raptor, FAA v KSMO, First A330neo

Also: ISU Plane Mess, Redbird-NBAA-Deland, 1st Inuit Female Pilot, NTSB on Reno, Rotorwash, Air Tanzania Q400s, Av-Appreciation It looks like the concept of presidential candidates>[...]

AD: Airbus Airplanes

AD NUMBER: 2016-18-07 PRODUCT: Certain Airbus Model A330-200 and -300 series airplanes; and Model A340-200 and -300 series airplanes.>[...]

AD: REIMS AVIATION S.A. Airplanes

AD NUMBER: 2016-19-15 PRODUCT: Certain REIMS AVIATION S.A. Model F406 airplanes.>[...]

Airborne 09.28.16: NEW DJI Mavic!, EAA's Next STC, Sean Tucker Honored

Also: LA Times v SMO, APS UAT Program, Gordon Bennett 2016, Tucson Control Tower, Hubble Find, Southwest Airlines, Iowa State Another new small unmanned aerial system is now on the>[...]

ANN's Daily Aero-Linx (09.30.16)

Airline Pilot Central AirlinePilotCentral.com (“APC”) launched in 2005 with the goal of providing comprehensive information for airline pilots.>[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2016 Web Development & Design by Pauli Systems, LC