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 09.02.14 ** HD iPad-Friendly -- Airborne 09.02.14 **
** Airborne 08.29.14 ** HD iPad-Friendly -- Airborne 08.29.14 **
** Airborne 08.27.14 ** HD iPad-Friendly -- Airborne 08.27.14 **

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

Annual Oshkosh 2014 'Best/Worst Of' Award Selection Invites YOUR Participation!

YOU Can Contribute To The Annual List Compiled By The Staff and Readership of the ANN and Aero-TV! E-I-C Note: We're going to start naming names and dropping details THIS week--- t>[...]

Airborne 08.29.14: Google Drone!, Cessna's 10,000th, Bearhawk LODA

Also: Big Boeing Order, Napa Tower Quaked, Landsberg Retires, Galileo Falters Breaking News! Google has unveiled an exciting new UAV project, called Project Wing, which has been un>[...]

Aero-TV: The Tecnam Juggernaut -- SeaSky, P2008, P2010, Trainers, and Astore!

An Impressive Line-Up Continues To Make A Solid Impact On Sport Aviation ANN CEO and Editor-In-Chief, Jim Campbell seized the opportunity to talk with Phil Solomon, the CEO of Tecn>[...]

AD: Bombardier, Inc. Airplanes

AD NUMBER: 2014-17-04 PRODUCT: Certain Bombardier, Inc. Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes.>[...]

ANN's Daily Aero-Linx (09.02.14)

FAA General Aviation Airports Report Beginning in 2010, the FAA began a national review of the general aviation airports resulting in two reports, General Aviation Airports: A Nati>[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2014 Web Development & Design by Pauli Systems, LC