Out Fox The $treet

While  Delta Air Lines ( DAL )  is set to become the world's 3rd largest airline when  U.S. Airways Corp. ( LCC )  and  AMR Corp ( AAMRQ.PK ) complete a merger later this year, the company could be set to profit the most from a slew of airlines mergers. In essence the domestic airlines market will become a three-headed monster with  United Continental Holdings ( UAL )  also competing for the top spot. Delta Airlines has already integrated a major merger with Northwest Airlines and stands to benefit from the other two market leaders struggling to complete the integrations of major mergers. United Airlines and Continental Airlines are still working through integration issues from a merger finalized already. In addition, Delta is working to finalize the purchase of Pinnacle Airlines out of bankruptcy. The deal has several plans that reduces costs and increases the focus on profitable routes which is refreshing for this industry. All of these mergers...

Back in April, ConocoPhillips (COP) split off Phillips 66 (PSX) to create a company focused on upstream exploration and production. The ultimate goal was to release the company from the regulatory and margin pressures common in the refining business of the new Phillips 66. A few months after the split, Buffett's investment arm of Berkshire Hathaway Inc. (BRK.B) famously increased investments in Phillips 66, to the surprise of most. The refining business has long been suffering due to low cost foreign imports and domestic regulations. Buffett and others though were interested in the potential of the chemicals and pipeline division. As we highlighted back then, the majority of the profits in that company will be derived from the refining arm for the foreseeable future. So was Buffett right to invest in Phillips 66? Read the full article at Seeking Alpha. Disclosure: Long COP. Please review the disclaimer page for more details. 

Very interesting that Delta (DAL) is going forward with buying a refinery in PA. The refinery is located on the Delaware River in Trainer, PA and has a crude oil processing capacity of 185K barrels per day of light, low-sulfur crude oil. The benefit is that the refinery will provide jet fuel reaching Delta's operations throughout the NorthEast, including its hubs at LaGuardia and JFK. That is at least the theory. What could go wrong? How much do you want to bet that in 2-3 years, Delta will be paying more for jet fuel than the average airline? The concept sounds great. One of the highest expenses for airlines is jet fuel and by purchasing a refinery a airline can provide itself with stable supplies. Thats the only hitch, airlines don't have issues with supplies, bur rather costs and jet fuel costs are based on crude oil. Something that a refinery won't actually control. The part that does make sense is that this was one of the refineries being shutdown and by reop...

At first glance, this seems like good news for the US Virgin Islands. Why in the world would a beautiful Caribbean island want a disgusting, old refinery? Why not tear it down and build a golf course? Or at least that is my thought. The Hovensa, a joint venture between Hess (HES) and Petroleos de Venezuela S.A, refinery in St. Croix is being closed due to various reasons such as lower demand since the financial crisis and modern refineries in the emerging markets. Also, another reason for the closure is that it is an oil-fueled operation leaving it at a disadvantage versus one fueld by nat gas. Isn't this just short sighted? That advantage will flip flop numerous times over the next 10-20 years. The 350,000 barrel per day refinery has been in operation since the 1960s and clearly provides a huge tax income for the island. Looking at the picture below I still wonder why paradise would want such a disgusting operation. Of course, the real question is whether Hovensa will tear i...