Fuelish

You all might know I find fuel logistics interesting, here are a few things I learned:

1. About 10% of gas sales as premium. Some cars require it to avoid knocking. Premium doesn't directly increase power, but without it, modern engines degrade performance to avoid knocking that would otherwise ensue.

2. Refineries produce an interim product that is not what you put in your car. A bunch of blending happens at the terminal (eg. where the pipeline ends and they load it onto trucks). Final blending happens at the pump - when you buy premium it is is mixing mostly the same gas as everyone else with a small amount of much higher octane gas. All grades are delivered on the same truck, they have multiple compartments.

3. You know how futures contracts work, to protect buyers of commodities like fuel from price hikes? It turns out that at least in USA, airlines don't use them. So whatever Iran War price hikes happen are directly hitting their profits and prices.

4. Airline stock prices are in general down around 20% due to Iran War, but Delta is not. That's because they own their own refinery, which supplies 75% of their fuel. This doesn't quite add up to me, since they must be buying higher-price crude like everyone else and only saving on refining cost. Maybe they sell a big chunk of the output to third parties.

I haven't seen any talk of fuel problems here in NZ but they surely exist. ANZ cancelled all flights to Samoa, so doing the same to Fiji (where we're going next) is a concern. Presumably flights to Asia and America are much better for them since both have their own fuel supplies.