Why Does Delta Want to Buy an Oil Refinery?

A nationally recognized reporter, writer, and consumer advocate, Ed Perkins focuses on how travelers can find the best deals and avoid scams.

He is the author of "Online Travel" (2000) and "Business Travel: When It's Your Money" (2004), the first step-by-step guide specifically written for small business and self-employed professional travelers. He was also the co-author of the annual "Best Travel Deals" series from Consumers Union.

Perkins' advice for business travelers is featured on MyBusinessTravel.com, a website devoted to helping small business and self-employed professional travelers find the best value for their travel dollars.

Perkins was founding editor of Consumer Reports Travel Letter, one of the country's most influential travel publications, from which he retired in 1998. He has also written for Business Traveller magazine (London).

Perkins' travel expertise has led to frequent television appearances, including ABC's "Good Morning America" and "This Week with David Brinkley," "The CBS Evening News with Dan Rather," CNN, and numerous local TV and radio stations.

Before editing Consumer Reports Travel Letter, Perkins spent 25 years in travel research and consulting with assignments ranging from national tourism development strategies to the design of computer-based tourism models.

Born in Evanston, Illinois, Perkins lives in Ashland, Oregon with his wife.

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Delta is in talks to buy an oil refinery, reports The Wall Street Journal. You can see the jokes now: Delta posts gasoline at “just $2.95 a gallon,” with fine print: “Plus a pumping fee of $0.99 per gallon.” The media will have fun with the prospect of an airline buying a refinery.

Actually, the move might make some sense—but not as much as you might think. Here’s what we know:

Delta isn’t likely able to run a refinery at a lower cost than a giant oil company, and Delta will not retail gasoline to the public.
If Delta sells fuel to itself at below-market prices, it’s simply shifting the difference from the airline operations’ bottom line to the refinery’s. So it looks like a zero-sum proposition overall.
Delta might find an advantage if it can optimize refinery operations to produce a maximum amount of jet fuel at a lower cost than the price of a refinery that produces a different mix of petroleum products.

Delta should investigate why the refinery is for sale. Are its costs high, or is demand shrinking? That’s anybody’s guess right now. But, buy or not, this deal isn’t likely to make air travel any better or cheaper.

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