Originally Posted by
adamj023
What bothers me is that the high oil prices we are seeing which the airlines are complaining about aren't because of lack of supply. It is because of things just like the inactive Conoco refining facility and the lack of a true policy by the government and to interfere in businesses and in new oil rigs and the like and refusing to build out new pipelines and other infrastructure needed. [snip]
It is an east coast refinery and is geographically located well for Delta. But we have a government that REFUSES to implement things like the Keystone Pipeline.
The question for Delta is can they make it work for them to reduce their existing fuel costs. Refineries turn raw fuel stock into finished materials.
And fuel comes from various locations but is cheaper and more efficient to pipe in.
The US is a net exporter of fuels. That is to say we export more refined fuels than we import crude. The idea of Keystone lowering retail prices is dubious at best and pretty sinister at worst. It's been reported that there is a $2bn tax incentive not to sell a drop of the finished fuels in the US. The prices of finished fuels on the international market are marginally related to domestic prices.
One thing that is definite is folks in Northern border states that get their natural gas from Canada will get socked with higher natural gas prices. Oil sand processing uses a tremendous amounts of natural gas. That pipeline will pull billions of cubic ft of natural gas off the export market. That has real effects on heating and electrical production in the United States. Both of which Xcel energy is a major player in domestically. One has to ask will Xcel be laughing their way to the bank when the deal gets done (at the expense of consumer and US industry)?
We have more oil in North Dakota than we can transport today. One has to ask if the reason we don't hear nearly as much about that problem?
Delta is making an interesting gamble. It could be because of the junk credit status, but one has to wonder why JP Morgan would get into this as the money man.