Delta (DAL) Bid for Conoco (COP) Refinery Said to Be 'Unlikely'
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Delta Air (NYSE: DAL) shares ticked higher late Thursday following reports the company might make a go at ConocoPhilips' (NYSE: COP) Trainer refinery in Pennsylvania.
The WSJ believes the rumors will prove to be false.
Though the move initially looks like a cost saving idea, that may not be the case. Given regional pricing for refined products (as opposed to crude prices which are set globally)Delta would face high jet-fuel costs coupled with crude prices it has no control over.
Then there would be the costs to manage sales of the non-jet fuel output.
The WSJ believes a better option would for Delta to let someone else sink in the capital while it enters a long-term, low-cost hedge.
Also of note, Delta managed to save about 11 cents per gallon from simple hedging strategies. Why invest in a highly cyclical industry when your own industry is just as volatile?
The stock is up about 0.3 percent from Thursday's close.
The WSJ believes the rumors will prove to be false.
Though the move initially looks like a cost saving idea, that may not be the case. Given regional pricing for refined products (as opposed to crude prices which are set globally)Delta would face high jet-fuel costs coupled with crude prices it has no control over.
Then there would be the costs to manage sales of the non-jet fuel output.
The WSJ believes a better option would for Delta to let someone else sink in the capital while it enters a long-term, low-cost hedge.
Also of note, Delta managed to save about 11 cents per gallon from simple hedging strategies. Why invest in a highly cyclical industry when your own industry is just as volatile?
The stock is up about 0.3 percent from Thursday's close.
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