Delta’s unconventional fuel hedging strategy to be put to the test as its refinery opens

Scrutiny over Delta's controversial decision earlier in 2012 to purchase an oil refinery located south of Philadelphia, Pennsylvania will be revived in the coming days as the idle facility prepares to restart production at the end of Sep-2012. With the rapid run-up in jet fuel prices during the last 60 days Delta's latest efforts to combat fuel price volatility will be closely watched by its competitors and the greater energy industry at large to determine if the carrier's carefully constructed gamble to control fuel costs pays off.

As the start of full-scale production approaches, Delta's enthusiasm for the project continues to grow as it aims to seek to alleviate the alarmingly rising rate of crack spreads, which during 2011 accounted for roughly 18% or USD2.2 billion of the carrier's total USD12 billion fuel costs.