Jet Fuel Prices Soar Amid Refining Margin Risk for Low-Cost Carriers
The price of jet fuel has risen to $181.46 a barrel, according to the International Air Transport Association's Jet Fuel Price Monitor, up 6.1% week on week. This is particularly concerning for low-cost and regional operators, as they have thinner margins and less sophisticated hedging books compared to network carriers.
A widening gap between crude and refined jet fuel prices means that even carriers with crude-linked hedges are exposed to refining margin risk. The crack spread, not the crude price alone, is crucial for these operators, and a sustained widening of this spread compresses margins faster at the regional end of the market than at flag carriers.
The EIA's daily wholesale price snapshot also shows Gulf Coast low-sulfur diesel at $4.95 a gallon and Gulf Coast heating oil at $4.85, both distillate products that compete with jet fuel for refinery output.