VIRGINIA POSTREL: Delta’s Oil Refinery Plan Flies Against Economic Sense. “Delta doesn’t need its own refinery to obtain jet fuel, which is traded in a thick worldwide market, any more than it needs to own a peanut farm to supply in-air snacks. And it seems unlikely that Delta would be noticeably better at running a refinery than any other potential buyer — or, for that matter, ConocoPhillips (COP), which plans to close down the refinery if it can’t make a deal. . . . You might think that owning a refinery would at least protect the airline from price fluctuations. But, Pirrong notes, crude oil prices affect the profits of airlines and oil refineries exactly the same way. When oil prices go up, their profits go down. Owning a refinery would simply magnify the effect.”
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