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Delta reaches deal to buy oil refinery
ajc.com ^ | 4-30-12 | Kelly Yamanouchi

Posted on 04/30/2012 2:40:40 PM PDT by rawhide

Delta Air Lines has reached a deal to buy an oil refinery, after weeks of speculation about such a deal.

In the unusual deal, a Delta subsidiary called Monroe Energy LLC reached an agreement with Phillips 66 to buy the Trainer refinery south of Philadelphia.

Monroe, a wholly-owned subsidiary, will receive $30 million in state government assistance from Pennsylvania for job creation and infrastructure improvement. Beyond that, Monroe will invest $150 million to buy the refinery and an additional $100 million to convert the facility to produce as much jet fuel as possible.

That production, along with deals to exchange gasoline, diesel and other refined products for jet fuel, is expected to cover about 80 percent of the jet fuel Delta needs in the United States.

Delta said it expects its ownership of the refinery will allow it to cut its fuel expense by $300 million annually.


TOPICS: Miscellaneous
KEYWORDS: delta; oil; refinery
Not a bad move at all. Spend $250 million the first year to buy it and to get it up and running, and then save $300 million annually.

It will be interesting to see what the other big air carriers do if this decision proves to be quite successful?

1 posted on 04/30/2012 2:40:51 PM PDT by rawhide
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To: rawhide

Vertical integration worthy of an airline.


2 posted on 04/30/2012 2:43:07 PM PDT by the invisib1e hand
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To: rawhide

I want one too.


3 posted on 04/30/2012 2:43:12 PM PDT by Paladin2
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To: Paladin2

“I want one too.”

A refinery or an airline?


4 posted on 04/30/2012 2:51:35 PM PDT by EQAndyBuzz (Would you rather eat dog food or cat food? Guess it's Romney 2012.)
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To: EQAndyBuzz

These days it looks like one should have both, though airlines have arguably never been profitable.


5 posted on 04/30/2012 2:53:50 PM PDT by Paladin2
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To: rawhide

I’ve never understood why the airlines, package delivery and OTR companies hadn’t formed co-ops by now.


6 posted on 04/30/2012 2:55:17 PM PDT by txhurl (Thank you, Andrew Breitbart. In your untimely passing, you have exposed these people one last time.)
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To: rawhide

Good for Delta, I guess. (Not my favorite airline. They’ve stranded me three times.)

However, the issue is that this refinery produces the low vapor pressure boutique EPA-approved gasoline that we are required to use in Pennsylvania. It isn’t made anywhere else, at least not in sufficient quantity.

Get ready for $6.00/gallon fuel, my fellow residents of the Keystone State. Maybe this time our fellow citizens won’t make the same mistake they did in ‘08. (I crack me up - ‘course they will!)


7 posted on 04/30/2012 2:56:53 PM PDT by SargeK
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To: rawhide

This is such a great business idea that the government is bound to find a way to stop it from happening.


8 posted on 04/30/2012 3:01:45 PM PDT by SamAdams76 (I am 19 days away from outliving Phil Hartman)
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To: rawhide

I Hope they hire NON UNION


9 posted on 04/30/2012 3:06:13 PM PDT by philly-d-kidder (AB-Sheen"The truth is the truth if nobody believes it,a lie is still a lie, everybody believes it")
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To: rawhide
Appears to be win-win for all parties involved.:

East Coast refining has been under pressure, with a lot of refining capacity shut down. The Trainer plant, idle since last year, is one of one of three Philadelphia refineries that faced closure because of poor profits.

10 posted on 04/30/2012 3:09:48 PM PDT by rawhide
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To: rawhide; Tribune7; Kid Shelleen; South Hawthorne

Philly PING!

11 posted on 04/30/2012 3:36:23 PM PDT by brityank (The more I learn about the Constitution, the more I realise this Government is UNconstitutional !!)
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To: Paladin2
These days it looks like one should have both, though airlines have arguably never been profitable.

Refineries are the poor relations in the oil industry when it comes to profitability. The problem on the east coast is the source of their oil, it is the highest in the country.

12 posted on 04/30/2012 3:38:25 PM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: rawhide

I don’t know how they can make much of an improvement in the profit picture. They’re going to spend some money and the states going to spend some money but they’re at the mercy of their source and that’s Africa and the middle east.
They pay more for their crude than anyone else.


13 posted on 04/30/2012 3:44:59 PM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: the invisib1e hand

“Vertical integration worthy of an airline.”

Vertical integration IS the future. Why be hostage to some little whipper-snapper that wants to clean you out?


14 posted on 04/30/2012 3:58:09 PM PDT by BobL
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To: South Hawthorne; brityank; Physicist; WhyisaTexasgirlinPA; GOPJ; abner; baseballmom; Mo1; Ciexyz; ..

ping


15 posted on 04/30/2012 4:19:53 PM PDT by Tribune7 (Oh, the irony)
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To: Tribune7
Southwest bought oil Futures several years ago. That is the reason they still don't charge for 1 bag.

To buy this is a great move for them but a bad move for public airline prices.

16 posted on 04/30/2012 4:54:40 PM PDT by AGreatPer (Any Republican. Just NO Obama.)
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To: SargeK

Low RVP year round ?


17 posted on 04/30/2012 5:53:20 PM PDT by Eric in the Ozarks
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To: rawhide

So how long until Dems start screaming about the evil “Big air” corporations?


18 posted on 04/30/2012 7:33:19 PM PDT by Windcatcher (Obama is a COMMUNIST and the MSM is his armband-wearing propaganda machine.)
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To: Eric in the Ozarks

It changes from winter to summer. That’s the problem - the three Philly area refineries make the summer blend for use in these parts. If they all are shut down and the EPA doesn’t grant an exemption, we are going to be hosed.


19 posted on 05/01/2012 8:06:41 AM PDT by SargeK
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To: SargeK

It will be interesting to see how Delta Airlines does with the Trainer refinery. At least they’ll keep it open...


20 posted on 05/01/2012 8:42:32 AM PDT by Eric in the Ozarks
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To: Eric in the Ozarks

I gather that the subsidiary who will run it has the required technical expertise and experience.

The challenge will be the cost structure to make it profitable where Phillips was not. I am guessing that they won’t be unionized.


21 posted on 05/01/2012 9:06:28 AM PDT by SargeK
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