When Delta Air Lines acquired a then-aging refinery near Philadelphia in 2012, the transaction stood out in an industry that typically sources jet fuel from external suppliers. The purchase of the Monroe refinery, which converts crude into jet fuel and other petroleum products, was framed as a way to lower Delta’s fuel expense. It also attracted attention because airlines were increasingly under pressure to reduce emissions.
Now, as jet fuel prices have accelerated ahead of crude oil amid wartime disruptions in the Middle East, the economics of that acquisition are coming back into focus. The widening difference between crude and refined jet fuel - known as the crack spread - amplifies what carriers pay for fuel purchased on the open market. For Delta, which still records market prices when it transfers fuel produced at Monroe to its airline operations, the advantage is that the margin generated by refining remains inside the company rather than flowing to outside suppliers.
The mechanics of the squeeze
Jet fuel prices have risen sharply in recent weeks, expanding the crack spread that refiners track closely. In the week of March 20, North American jet fuel averaged about $179 a barrel, while Brent crude was roughly $110 a barrel, according to data compiled by the International Air Transport Association. U.S. spot jet fuel prices were higher still, about $4.56 a gallon on March 20, which equates to roughly $192 a barrel, according to Airlines for America.
That gap is effectively embedded in the purchase price for airlines that buy fuel on the open market. When the spread expands, airline fuel bills can rise rapidly even if crude moves relatively little. Alaska Air Group’s chief executive, Benito Minicucci, noted that his airline burns about 100 million gallons of fuel a month, meaning a $1 increase in jet fuel prices translates into roughly $100 million of additional monthly cost.
How Monroe alters Delta’s exposure
Delta has not disclosed exactly how much of the current jet fuel spike Monroe can offset. But company filings show that when refining margins widen, Monroe has reduced Delta’s average fuel price materially. Delta reported that Monroe lowered its average fuel price by about 23 cents per gallon in 2022, 10 cents in 2023, one cent in 2024 and four cents in 2025. Based on Delta’s disclosed fuel consumption, those per-gallon reductions equate to roughly $785 million, $393 million, $41 million and $171 million, respectively.
Monroe produced $777 million in operating income in 2022, a year when refining margins surged after disruptions in global fuel markets following Russia’s invasion of Ukraine. By contrast, Monroe posted a $216 million operating loss in 2020, when the pandemic sharply reduced jet fuel demand and unsettled refined-product markets.
Analysts and industry observers note that the structure provides a form of internal hedging. Morningstar analyst Nicolas Owens said the arrangement can soften the impact of widening crack spreads. "When crack spreads widen, Delta is essentially paying itself the crack spread for that portion of the fuel," Owens said. "It does mute the impact of the fuel price spike for Delta." Conversely, the refinery can become a headwind when refining margins compress.
Comparing fuel cost outcomes across carriers
The contrast with other carriers was apparent during the last major fuel-price surge. Delta’s average fuel cost climbed to $3.36 a gallon in 2022 from $2.02 in 2021, lifting its annual fuel bill to about $11.5 billion, or 24% of total operating expense, up from 20% the prior year. United Airlines, by comparison, paid an average of $3.63 a gallon in 2022, up from $2.11 in 2021, pushing its fuel bill to roughly $13.1 billion, or 31% of total operating expense, from 22% in 2021.
Fleet composition, route structures and other operational differences also influence what each airline pays per gallon.
Rivals and sourcing adjustments
Other carriers have taken steps to blunt regional price disparities and refinery margin impacts. Minicucci said Alaska has shifted some supply away from the U.S. West Coast, including tankering fuel from Singapore to Seattle, because refinery margins on the West Coast have pushed jet fuel prices about 20 cents per gallon higher. American Airlines reported that higher fuel prices added about $400 million to its first-quarter fuel bill since its last update in late January. United’s chief executive, Scott Kirby, warned employees that jet fuel prices had more than doubled in three weeks and, if sustained, could add about $11 billion to United’s annual fuel bill - an amount more than twice the carrier’s best-ever yearly profit.
Denton Cinquegrana, chief oil analyst at Oil Price Information Service, summed up the strategic value of ownership succinctly: "At the moment owning a refinery is almost like a hedge."
Costs, regulatory obligations and limits
Owning Monroe does not remove Delta’s exposure to higher fuel prices entirely. Refining margins are cyclical and can swing sharply with market conditions. The refinery also introduces regulatory and compliance costs tied to fuel production; Delta said its expense for complying with the U.S. Renewable Fuel Standard rose to $312 million in 2025 from $203 million in 2024. In years when refining margins narrow, those compliance costs can offset much of the financial benefit Monroe provides.
Delta’s chief executive, Ed Bastian, acknowledged these limitations while underscoring the refinery’s value. He said that rising jet fuel prices had added about $400 million to the airline’s fuel bill in March, but that Monroe provides a "meaningful hedge" against the refining margin between crude and jet fuel. "It’s not going to cover the crack entirely," he said. "But (it) gives us a fairly significant hedge." Bastian added that Monroe’s profits should begin contributing starting in the second quarter.
Bottom line
Delta’s ownership of the Monroe refinery gives the airline a mechanism to retain refining profits internally and to blunt some of the cost pressure when jet fuel outpaces crude. That benefit has been episodic: it grows when crack spreads widen and can reverse when refining margins contract. The refinery also brings operating volatility and regulatory expenses that can diminish its value in certain market environments.