Fuel 101 From Well to Wing

Commercial aviation helps drive more than 10M American jobs and 5 cents of every dollar of U.S. GDP
Commercial aviation drives more than $1 trillion per year in economic activity
In 2012, U.S. airlines moved more than 48,000 tons of cargo per day
In 2012, the value of a kilogram of U.S. merchandise exported by air averaged 121 times the value exported by sea
For every 100 airline jobs, some 360 are supported outside of the airline industry
Federal taxes constitute $61 – or 20% – of the price of a typical $300 domestic round-trip ticket
In 2011, U.S. airlines carried 16 percent more passengers and cargo using 10 percent less fuel than in 2000
Domestically, airlines drive 5% of economic activity but account for 2% of man-made GHG emissions
From 2000-2011, airlines reduced GHG emissions by 11% while transporting 16% more passengers and cargo
From 1975-2011, U.S. airlines and their partners reduced significant noise exposure by 99%
Commercial air travel is the safest form of intercity transportation in the United States
In the most recent decade, scheduled air service on U.S. airlines was seven times safer than in the 1970s
From 2000-2012, U.S. airlines improved the on-time arrival rate from 72.6% to 81.9%
From 2000-2012, U.S. airlines reduced the flight cancellation rate sharply from 3.30% to 1.29%
Airfares are a bargain: From 2000-2012, U.S. CPI rose 33% while average domestic fare rose just 14%
Adjusted for inflation, the average round-trip domestic airfare fell 15% from 2000
2007 domestic flight delays cost the United States approximately $31 billion
In 2012, the value of U.S. merchandise exported by air reached an all-time high of $427B
In 2012, U.S. exports of air-travel services reached an all-time high of $39.5B, driving a $5.1B trade surplus
In 2012, U.S. passenger and cargo airlines spent more than $50B on fuel, averaging 36% of operating expenses
In 2012, U.S. airlines posted the lowest annual rate of mishandled baggage ever recorded
FAA projects U.S. air travel demand to top 1 billion passengers in 2027
In 2012, US airlines flew 83.4 million passengers in scheduled international service - a record high
In 2012, the total value of merchandise exported from or imported to the United States by air exceeded $927 billion
In 2012, 7.15 teragrams of merchandise was exported from or imported to the United States by air

	Fuel 101 From Well to Wing
	PubZone1 The standard barrel of petroleum contains 42 U.S. gallons of crude oil, but the refinement of a typical barrel results in more than 44 gallons of petroleum products because there is a reduction in the density of some of the original crude oil as different petroleum products are created. Of the resultant products, jet fuel usually represents only 8 to 10 percent. Other products include motor gasoline, distillate fuel oil, still gas, petroleum coke, liquefied refinery gas, asphalt and road oil, various oils for foodstocks, lubricants, special napthas, kerosene, waxes and an assortment of other miscellaneous products. Commercial aviation turbine fuel is a kerosene-based product meeting the requirements (e.g., composition, volatility, fluidity, combustion, corrosion, thermal stability, contaminants, additives) of the ASTM D1655 and/or ASTM D7566 specifications. Jet A (used in the United States) and Jet A-1 are two different grades of kerosene fuel that differ in freezing point. After it is refined, jet fuel travels by pipeline or seagoing vessel to storage sites, airports or fuel terminals, where it is distributed by truck, barge or pipeline. Once it reaches the airport, fuel is distributed in a variety of ways. Some airports have internal hydrant systems that carry fuel from a storage site at or near the airport, then under ground to the terminal gates, where hoses span the final distance to the wing of the airplane. At airports without such systems, refueling trucks are used to move fuel from the storage site to the aircraft. Accommodating Growth in Demand The price of crude oil has risen in recent years, because worldwide demand has increased in response to global economic growth – and supply has not fully kept pace. In 2008 world demand for petroleum liquids averaged 85.4 million barrels per day. Military conflict, civil unrest and labor strife have triggered supply disruptions on a more consistent basis in various parts of the world, and growing demand in China, India and other emerging markets has added to the global appetite for crude oil. Producers sell oil through a variety of arrangements, including private bilateral contracts and market contracts that are priced through a commodity exchange. Air carriers buy fuel from multiple suppliers and at differing rates. Not every supplier operates at every domestic airport that a carrier may serve, so multiple arrangements are necessary. Since airline schedules make fuel demand generally predictable, carriers can purchase fuel months or years in advance in order to receive a discounted rate from the supplier. Locking in the prevailing price for future deliveries of a commodity like jet fuel is called a hedge. Hedging allows airlines to limit the uncertainty over future costs by mitigating volatility and improving financial planning. However, hedging is a gamble that requires a relatively healthy financial condition, a willing counterparty and often a sizable upfront transaction cost. This makes hedging an increasingly difficult proposition for many carriers. Hedging also can be financially risky, because an airline could find itself locked into paying more for fuel if the market price drops below what it has agreed to pay in a hedge contract. As Standard & Poor's remarked in a March 28, 2008 research note, "...hedging high and volatile fuel prices is expensive and may require posting cash collateral." The Cost of Doing Business The price paid for jet fuel is a function of long-term contracts, spot market prices and point of sale, among other factors. Those include difficulties in refinery operations; environmental regulations; surges in regional demand; seasonal swings in demand, supply disruptions caused by natural disasters, military conflict or geopolitical events; and market speculation. Fluctuations in the price of jet fuel are highly correlated with movements in the price of heating oil. At current levels of consumption, every dollar increase per barrel (42 gallons) drives an additional $415 million in fuel expenses for U.S. passenger and cargo airlines; every penny increase per gallon drives $175 million in annual expenses. Fuel expenses now range from 20 to 40 percent of U.S. passenger airline operating costs. The difference between crude-oil and jet-fuel prices, commonly known as the "crack spread," historically averaged about $5 per barrel. In the weeks following hurricanes Katrina and Rita in 2005, however, the crack spread widened dramatically when major oil-supply disruptions prompted refiners to focus their operations on producing gasoline. As a result, airline demand for fuel far exceeded the available supply, causing the spot price of jet fuel to spike at more than double the spot price of oil. At its peak, the crack spread added the equivalent of $60 per barrel to the final cost of jet fuel, which surged to $131.47 in the Gulf Coast on October 5, 2005. Just as motorists pay different prices for gasoline in different parts of the country, airlines pay different prices regionally for jet fuel. West Coast prices traditionally run higher, because of limited refining capacity as well as inferior storage, logistics and distribution capabilities. In addition to the mountainous terrain, which limits trucking capability, the West Coast lacks the more robust pipeline network of the East, although the latter is becoming increasingly strained by today’s demand and competing product needs (i.e., gasoline vs. diesel vs. jet). Much of the product on the West Coast is imported, often from countries with even higher prices. Airlines constantly strive to improve jet-fuel efficiency, because unlike other modes of transport, they have no alternative source of energy. Airlines conserve fuel in many different ways, including reducing and more accurately measuring onboard weight; cruising longer at higher altitudes; employing greater use of flight-management systems; and conducting more in-depth analyses of weather conditions. In addition, airlines are modernizing their fleets with more fuel-efficient airplanes; investing in winglets to reduce aircraft drag and thereby increase fuel conservation; redesigning hubs and schedules to alleviate congestion; and pooling resources to purchase fuel in bulk through alliances with other carriers. Did You Know? Determining how much fuel is needed for a particular flight involves a variety of factors such as aircraft type, passenger load, cargo, weather conditions and route length. Every aircraft is required to carry enough fuel to reach its destination, or reach a pre-determined alternate airport and still be able to fly for an additional 45 minutes. There are limits both for how much an aircraft can weigh to take off and land. All else equal, fuel efficiency increases with altitude; every aircraft type consumes fuel at a different rate. Occasionally, an aircraft will carry more fuel than is needed for a particular flight either because fuel is more expensive at an intermediate stop, or because “ballast” is required to provide correct weight and balance. Winglets, those vertical fins at the ends of the wings, make airplane wings more aerodynamic, cut fuel consumption between three and five percent, saving more than 100,000 gallons of fuel per aircraft per year while reducing noise and emissions. Jet fuel is linked to the commodities markets principally through home heating oil, a refined product similar in consistency. Because home heating oil is traded on public exchanges, it is often used as a reference to price jet fuel – when the price of heating oil rises, so does the price of jet fuel. The inverse is also true, in that jet fuel prices often move heating oil prices. Jet A and Jet A-1 are kerosene grades of fuel for aircraft powered by turbine engines. Jet A is the most commonly used fuel for commercial airplanes and has a maximum freezing point of -40°F; Jet A-1 has a maximum freezing point of -53°F to meet the low-temperature requirements of long, high-altitude flights. Jet A and Jet A-1 have a high flash point (100° F), making them relatively stable fuel types. A Boeing 737-700 can hold close to 6,900 gallons of jet fuel and fly 3,400 nautical miles; a Boeing 767-300ER can hold close to 24,000 gallons of jet fuel and fly 6,100 nautical miles. In 2010, U.S. refineries produced approximately 1.4 million barrels of jet fuel per day, closely matching U.S. consumption; U.S. airlines consumed about 1.1 million barrels per day in 2010. The U.S. Air Force consumes over 60 million barrels (or 2.5 billion gallons) of aviation fuel annually, about 42 percent of which supports aviation mobility. PubZone2	A4A supports a truly comprehensive, meaningfully balanced U.S. energy policy and is committed to protecting our planet.