No, the drones are not invading; Jet A fuel indicators for 2025

Jessie Naor (00:00) All right, good morning and welcome to the VIP seat. Today is December 19th and our top stories in Private Aviation Today include our take on the drone crisis in New Jersey and elsewhere and what your jet-A fuel bill could look like maybe in 2025. Your hosts today include yours truly, Jessie Naor and our co-host today is Jon Boyle. Jon, welcome to the show.

Jon Boyle (00:21) Thanks, Jessie. It's an honor to be here. I'm excited to play the role of co-host today and for what I believe is your last episode of 2024, correct?

Jessie Naor (00:30) That's it, we are rolling into the holidays. So you guys will not be seeing us next week. So last one of the year, big number.

Jon Boyle (00:37) Huge numbers. Let's go.

Jessie Naor (00:39) All right, folks, sit back, buckle up, and let's take off.

right, John, well, we have to get this one out of the way because this is what everyone's talking about and texting me about and calling me about too because we're in the business aviation world, so we're a little closer to the drones and eVTOLs and all those things out there, and everyone's wondering what the heck is going on in New Jersey.

I really had to laugh quite a bit. love Larry Hogan, the former governor of Maryland. I really supported him, but I saw a video that he posted on Twitter that was basically the constellation of Orion, and he was claiming that those were drones. I don't know if he was just joking, but I'm like, that's obviously stars. So what do you think off the top here?

Jon Boyle (01:30) Yeah.

Well, listen, actually, even just recently as two days ago, my oldest son, Jack, a news story came on about the drones and he's 17 years old. He looked at me and said, hey, dad, what do you think about this? And I said, buddy, I wish I had a better answer for you. And in general, my thesis is I wish somebody would come out and give some sort of productive or logical explanation for what it is. I mean, there's so many places to go.

I know this is a serious topic and we'll get into it, but we have to give some recognition to the internet creators out there and all the great memes that exist with these things. Everything from the New Jersey Guide to Aircraft Identification, where the silhouette from everything from a 747 down to a Cessna 172 is labeled as drone. And an AI-generated image of McDonald's getting delivered via drone to a certain former New Jersey governor.

Jessie Naor (02:09) Yeah.

Jon Boyle (02:25) But you know, it's all over the place. It's taken everything

Jessie Naor (02:27) you

Jon Boyle (02:29) by storm. And I don't know if you had an opportunity last night to see the golf match between Bryce and DeChambeau and Brooks Koepka and Scotty Scheffler and Roy McElroy out in Vegas, Shadow Creek. actually special shout out to a co-host alumni of the VIP seat, Jack Lambert. They had a nice sponsorship deal for the event. But as the golfers were out warming up, their range balls, their golf balls were delivered to them via drone.

Jessie Naor (02:47) Mm-hmm.

that's cool. That's awesome. So that's what it is. It's golf ball carrying drones to the courses of New Jersey. Well, to dig into this, I I spent quite a bit of time this week, but even I am like trying to figure out what's going on over here. I think what's really happening is A, you know,

Jon Boyle (02:55) You know, of course it's Vegas, it's certainly over the top here.

Hahaha!

Yeah, yeah, yet another practical application of the drones.

Jessie Naor (03:19) Flying drones has become so much easier. There's a lot more people with access to them. was reading there's almost 800,000 drones registered in the United States alone. That doesn't include the little recreational ones, you know, that people just get from, it used to be Toys R Us, maybe Target or something else. So between that, 100,000 people six years ago having them, I think it's a lot more common now.

Jon Boyle (03:30) you

Jessie Naor (03:42) There's also new regulations that went into effect. And there's a map that you can look at from the FAA that shows areas where recreational drones are allowed to fly within a visual line of sight. And funnily enough, when you look at the maps of the reported sightings, they're pretty similar. So I think this is a lot of recreational, some commercial, maybe some military, but more than anything, people are just now noticing how much stuff is over our heads.

Jon Boyle (04:06) Yeah.

sure. you know that 800,000 number you threw out, Jessie I mean, I can guarantee you a week from today as kids and adults alike are pulling presents from underneath the Christmas tree, there'll be thousands more, you know, and so you know, I don't know, I've heard everything from, you know, some sort of intelligence collection effort. And I think, you know, as I spent a little time spent about seven years in the army prior to working for Afuel, and I'm not gonna

Jessie Naor (04:25) Yeah.

Jon Boyle (04:36) claim to be the National Security Advisor or anything, but I can tell you that a couple of principles of intelligence correction or reconnaissance is light and noise discipline. And these are neither quiet nor are they indiscreet with respect to the flashing lights they have. So you'd have a hard time convinced to me that it's like any sort of intelligence surveillance or reconnaissance mission by either an internal agency or external agency. I tend to agree with you.

Jessie Naor (04:44) Hey.

Jon Boyle (05:01) that it's probably recreational activity coupled with the mass hysteria. was talking to my cousin, which by the way, I think every great conspiracy story starts with, I was talking to my cousin. But

Jessie Naor (05:16) Ha ha ha ha.

Jon Boyle (05:17) shout out to Captain Sean based in New Jersey there. But he basically was like.

I think it's a little overblown from where they are. He's got a pretty good thumb on the pulse of what's going on for military operations out there. He doesn't know of anything there. And then he's like, listen, we're also a stone's throw from Newark, Morristown, and Teterboro. I mean, this is some of the busiest airspace on the planet, certainly within the country. So when you couple that, it like you said, kind of the recommended areas for recreational operators

Jessie Naor (05:36) right.

Jon Boyle (05:48) to fly these things.

Jessie Naor (05:49) you

Jon Boyle (05:49) You're just going to see this. And if your brain is telling you that there's a bunch of drones out there, every time you go outside and you see an airplane, you're going to think drone. So I probably a little bit of everything. The truth is somewhere in the middle, but I'm not quite sure it's something to get overly wrapped up about.

Jessie Naor (05:53) you

Now.

Yeah, I would think if we had some sort of national security risk, they wouldn't be flashing a bunch of lights at you. It's kind of a, you know, if they want to not be detected, they're not going to do that. It is an issue, though. And we've seen this in Israel, and this is going to be something we really do have to address at some point. In Israel, they're having a really hard time tracking these things, you know, and they are using them for terrorist activities and attacks and other things. So there is some.

Jon Boyle (06:13) Yeah. Yeah.

Yep.

Jessie Naor (06:30) I think cause for concern and cause for discussion about how do we regulate drones. A lot of them are required to have a remote ID so they can be identified, but not all of them, especially some of the cheaper ones that are coming in from overseas. We've seen lots of discussions around that. So I think, you if airplanes are required to have ADS-B, drones should have something so at least you know what's over your head at any given time. I think that's fair enough for, you know, individuals and private citizens to know.

Jon Boyle (06:56) Yeah, I agree with you. think that remote ID thing is certainly something we've been hearing a lot about this week. And what's interesting though is it indicates that the remote ID will kind of give you an idea of what the system is, its altitude, its direction, its speed, but it doesn't necessarily tie it to anybody's personal information.

Jessie Naor (07:02) Okay.

Jon Boyle (07:15) Which is interesting, you think that if they're gonna go through all the trouble to do that, you might wanna register to a person so at least you have some sort of idea of who's operating it in the event that it's not where it's supposed to be and that person can be called and say, hey, are you aware that one of your systems is in a no fly space or something like that to try to get it out of there in some sort of civil manner.

Jessie Naor (07:33) Well, no doubt, given the number of politicians involved in the discussion, we will probably have some new regulations coming down the pike if I had to guess from this whole situation.

Jon Boyle (07:41) Yeah, yeah. And look, I hope they do because look, there's a lot of great applications for unmanned aerial systems, whether it's military or agricultural survey work, whatever it is. And as we discussed, there's just going to be more of them. So let's just do it in a pragmatic and meaningful way.

Jessie Naor (07:56) Yeah, awesome. Well, we have a fuel expert here today. Jon is at AvFuel and he's one of the ones I always go to. I'm like, hey, what's going on in the market? And what about this? What about that? So we have to take advantage of your knowledge with us today. So first thing I want to talk about is SAF, Sustainable Aviation and Fuel. Where are we at today? This is something I think everyone's been interested in for a long time, but we just haven't seen a lot of progress on because it's a

huge challenge. maybe just fill us in first of all, where we are as far as getting it as a consumer and aircraft operators and then also what in 2025 do we need to be thinking about in terms of regulations.

Jon Boyle (08:35) Yeah, and obviously try to put myself in some other people's shoes as a fuel supplier. can tell you we're pretty proud of where we are. And I think as an industry in general, we should be pretty proud of where we are. Even if you go back five years, the availability of SAF, it existed but in really, really limited quantities and low blend ratios. And it was almost more for demonstration purposes more than anything. But fast forward to

2024 and and close to I mean this is gonna sound ridiculous, but but about half of percent of the global jet demand Was was met with SAF this year Okay, and so when you think about the millions and millions and millions of gallons of SAF that that makes up That's pretty incredible to think that it really wasn't commercially available just five years ago and so I know we've got some lofty expectations, but we've made some considerable strides and we'll talk a little bit later about

Jessie Naor (09:24) Right.

Jon Boyle (09:29) availability across the United States rather than just in the West Coast here. But I think what's interesting more than anything is to date, everything with respect to purchase of SAF has been on a voluntary basis. There's really been no legislation for the product or legislation that creates a demand for the product to speak of until recently, you know, and, you know, we're starting to see some

Jessie Naor (09:41) Mm-hmm.

Jon Boyle (09:53) Some real legislation hit the books and specifically on January 1st of next year There's in Europe the refuel EU mandate. So beginning in 2025 Fuel suppliers are actually obligated to supply any of the EU Union airports with at least 2 % SAF and you know, and their goal is to gradually increase that by 6 % by 2030

Jessie Naor (10:15) wow.

Jon Boyle (10:20) 20 % by 2035 and up to 70 % by 2050. And so, we're still navigating the reporting requirements for the end user. But another thing that's happening in that refuel EU is no more tankering. So you're not gonna be allowed to, or I should say they're gonna mandate that you're only allowed to take as much fuel as the next leg of your trip dictates that you can take.

Jessie Naor (10:33) Okay.

Really?

That's not good for people who trying to be efficient with fuel. We're trying to carry SAF from one place to the other that might be a better price.

Jon Boyle (10:48) Yeah

Correct. And obviously it has a lot to do with, they just they've made the decision that they don't want to see people flying heavy and burning excess fuel to get to altitude. And so this is this is their their stopgap to that. So the UK adopting a similar policy to this refuel EU. And so that's that goes into effect literally two weeks from now. So we'll see the implications of that by the by this time next year.

And then, know, a little closer to home, you know, we got a couple of things here. Back in April, this SEC climate disclosure was making some headlines. Now it's currently on hold and it's pending kind of some judicial review. A lot of people fighting this in the courts. But the basics of this was, you know, for any, what is referred to as a large accelerated filer. So publicly traded companies.

Jessie Naor (11:27) you

.

Jon Boyle (11:45) with a market value of shares held in the public of over 700 million. They're gonna have to start to report on their scope one and two emissions in 2026, but for the year 2025. So

while it doesn't really start next year, it kind of does. Exactly, you know, and so kind of an important material change here with respect to SAF is like, now we're getting into a little bit of

Jessie Naor (11:57) They're going to start preparing. Yeah.

Jon Boyle (12:11) voluntarily reporting or utilizing into more of a little bit of a mandate where people are going to have to report on their climate targets and goals and the processes that they're taking to mitigate those climate risks. right. And so again, that's on hold. But really interesting is now you're seeing that that's at the federal level, but you've got California who says, okay, well, we're not waiting for the Fed. We're going to do our own thing.

Jessie Naor (12:16) Okay.

Yeah. Yeah.

Jon Boyle (12:39) And so the California climate disclosure is similar,

but it's for not only public companies, but also private companies whose revenue is over half a billion dollars. And they do business in the state of California. And the way they define that is basically if you're paying sales tax in excess of about $690,000, or if you've got property tax exceeding close to 70,000, or if you're paying anybody in the state of California.

Jessie Naor (12:50) Okay.

Jon Boyle (13:05) in excess of $70,000, you qualify for having to report to the state of California. So

Jessie Naor (13:07) That's broad.

Jon Boyle (13:10) you think about really any private company, if they're operating a jet, there's a good chance that their revenue is over half a billion dollars and they do business in California.

Jessie Naor (13:15) Any

fast food chain store, any consumer facing product is probably going to be in that bucket.

Jon Boyle (13:27) Mm-hmm.

Yeah, you

think of like your, without naming names, your major software companies, your major data and hardware companies, really anybody that operates a jet there. So, you similar, you have to report scope one and two emissions. And again, like the reporting of what you're doing with it is a little cloudy from what I could tell, but I got to assume like if you have to report your emissions, you're also going to want to report what you're doing to offset those emissions as well.

Jessie Naor (13:37) Yeah.

Jon Boyle (13:55) So again, just kind of a flip really from the volunteer aspect of it to mandate, you know? And so these are the things that I think are gonna continue to drive demand for SAF Whereas before, like I said, it was just completely voluntary.

Jessie Naor (14:07) Yeah.

Well, and how is this handled? know, this is the other edge of this that I've heard people discussing is, know, from a charter operator, an owner, a fractional, you know, what what falls into those different scopes?

if you were the Nikes, you and you chose to charter plane, which probably isn't likely for Nike, but if you chose to charter instead of own and manage, how do you handle that? And also the charter company got to be responsible for giving people these numbers or no.

Jon Boyle (14:23) you

I see. Yeah, yeah.

Yep.

Yeah, I don't know. I mean, you look at the definitions of scope one and scope two and what you just kind of suggested would be scope two because it's kind of tied to like work travel that is directly associated with the performing business functions there. And so like they'd probably have to report on that. Us as a fuel company, because that fuel is being burned in that airplane, it's something we might have to report on.

Jessie Naor (15:04) right.

Jon Boyle (15:05) And so there's still a lot to learn. And it's certainly going to be a relatively complex process here.

Jessie Naor (15:08) Right.

Yeah, well, California is usually leading the charge on those things. I don't know what it's going to look like. I from a national level, you know, given the change in policies, maybe we don't see that at the federal level, you know, in the coming years. But, but we, you know, that's.

Jon Boyle (15:19) Yeah, yeah

Yeah. No,

it's a good, it's a great point. I mean, you look at, you know, lot of speculation, okay, Trump coming in, maybe he's not as concerned about this type of stuff. But, I mean, you look at the kind of leading trade organizations and the de facto governing bodies of aviation, whether it's NBAA or EBAA or IATA, you know, they, all really want to lead, in, in sustainability and they, you know,

Jessie Naor (15:51) I'm

Jon Boyle (15:54) out and say we've got a goal of being net neutral by 2050 and you can't do that without taking giant steps each and every year. So my guess is that those that have been voluntarily doing it will continue to do it and there'll still be some internal push from the trade associations and like I said some of those de facto governing bodies to keep advancing it here.

Jessie Naor (16:14) Yeah.

What this is starting to get more more complicated? don't mind moving the ball forward, but when you start to layer on a lot of reporting and certification and processing, all that stuff, it's like unintended consequences. Are you just making it so difficult to do business that people can't do business, or are you actually making a change and a difference? I hope we lead more towards that than the other.

Jon Boyle (16:39) Yeah,

for sure. And again, like a little bit of a shameless plug. I don't want this to be an infomercial, but certainly AvFuel and there's other companies out there that can do this as well with respect to we can sell you SAF, we have book and claim models, we've got the carbon credit solutions, and even something like our AvFuel Zero product where we literally help companies identify what their emissions look like, measure those emissions, set goals for what they want to accomplish.

put things in place to abate those emissions, report back to them and audit the progress all along the way here. So like anything, there's an opportunity for everything and hopefully try to keep it as simple as possible.

Jessie Naor (17:21) Well, that's good because as a former operator, I wouldn't have wanted to figure that stuff out. So I would have been calling you anyway. All right, well, speaking of politics, a lot of changes are coming at us, good and bad all across the board when we don't know how things are going to come out eventually. But unfortunately, Michael Whitaker, the current director of the FAA or administrator of the FAA is stepping down right after inauguration. So it's obviously a political change.

Jon Boyle (17:24) That's what we're here for. That's what we're here for.

Jessie Naor (17:48) But it's really a shame because he was appointed like 19 months ago. And before that, we didn't have an FAA administrator. it's just that role is so filled with difficulty. First of all, because such a large bureaucratic organization, but it's like, we just can't keep leaders in the role. And it's really going to affect operators, everyone in the ecosystem of aviation. But it's a problem.

Jon Boyle (18:12) It

is. know, Jessie, I know you're a huge proponent of anything safety related. and you think about the role of what the FAA administrator looks like and basically to regulate the airlines and aircraft manufacturers and most importantly, managing our nation's airspace. And when we think about our airspace, like it's definitely the most complex airspace in the world. and so big challenge, I think the thing that concerns me.

Jessie Naor (18:18) in

Jon Boyle (18:41) is something happens one time, it's an anomaly, it happens twice, it's a pattern, it happens three times, it's a trend here. But we're looking at the last two administrators that you go back a series of years, the average tenure for an FAA administrator is about five years. And Mike Whitaker's predecessor, Stephen Dixon, he was only in place for two and a half years before he stepped down. And as you pointed out,

Mike Whitaker will only be in place here for a little over a year and a half. And so as you're trying to make progress, it's tough to do when the leadership at the top is kind of a revolving door.

Jessie Naor (19:14) And it's not just that role. The heads of aviation safety and aircraft certification are currently open. Trump is going to be appointing new heads of communications, government relations, airports, deputy administrator and general counsel. mean, top, top positions kind of, you know, and we're relying so much on the FAA not only to regulate safety, but also to move us forward in terms of good regulations that are helpful for the industry.

Jon Boyle (19:36) Uh-huh.

Jessie Naor (19:39) I just don't know how we get anywhere when we just don't have the key people that we need to make the change on such a big level.

Jon Boyle (19:46) For sure. Right. Which then leads to the speculation of who's he going to pick and who's going to influence that decision. course, Mr. Elon Musk has had a pretty pivotal role in the reelection campaign. And I think his beef with the FAA is pretty well documented through some of his SpaceX projects. And of course, both President Trump and Elon have a mutual

Jessie Naor (20:03) Yeah.

Jon Boyle (20:08) desire to limit overly bureaucratic organizations here. yeah, I don't know. It's kind of interesting. You look at Trump and he's the first president since Grover Cleveland to serve non-consecutive terms. And Cleveland didn't have to worry about appointing an FAA administrator back then. And so it'd be interesting, like what lessons did he learn the first time? Has he had time to think about what he'd like that to look like? He's obviously a big user of private aviation.

Or, you know, where do we see him kind of go back to what was going on in his first term with, you know, kind of a push for privatization of the ATC system, you know, and what are the implications of that?

Jessie Naor (20:42) Yeah, and that's already started coming up this week. I mean, they're talking about raising pilot ages. We're going to see a lot of upheaval, I think, know, definitely in the first year, if not a couple of years from now. But it's going to be interesting. And I read this number too. So we know that Sean Duffy is taking over Department of Transportation. But the FAA is the DOT's largest annual expense, and they're spending over 20 billion dollars annually.

Jon Boyle (21:05) Yeah.

Jessie Naor (21:05) I feel like that's gonna be a target. It's definitely gonna be a target.

That's a huge budget and you know, if they're looking to trim some fat, I don't know where the fat could be, but I imagine it's gonna come.

Jon Boyle (21:17) Yep. I agree with you. hope, again, I hope everything is measured and pragmatic with this. think part of the reason that this role has stayed largely nonpartisan, I think everybody would agree. If there's one agency that you kind of want noodling over every detail, it would be the FAA. I mean, if this is very high risk, high reward type thing that's if not done and managed correctly could be disastrous.

Jessie Naor (21:43) Yeah, well, that's, you know, unfortunately a lot of the regulations that we have, that's why we have them in the first place. It's this, this reaction to, to issues, but I guess we'll see what happens. I'm waiting and very curious to see who the pick is. And I hope that they're at least somewhat knowledgeable about private aviation, you know, don't focus so much only on the Boeings and the space people, like give us some love too. We need help.

Jon Boyle (21:53) Yeah.

Right. Exactly.

Jessie Naor (22:06) Well, so our next story, I'm going away from the United States a little bit, but this came out this week. The Middle East had their business aviation conference last week, so there's been a lot of news stories around them in this last week here. But in the UAE, they are experiencing massive, massive private aviation growth. And we've kind of heard this, like India and the Middle East are like the big emerging markets right now. But when I start to dig into the numbers, it's pretty substantial.

So in addition to the 6,700 millionaires moving to the UAE, they also have one of the highest number of centi- millionaires in Dubai.

which is investable assets over $100 million, just the kind of folks that buy airplanes, it's going to be surging by 150 % by 2024. So we're seeing a lot of activity. I think manufacturers and fuel sellers and all sorts of people are now looking at the Middle East as this big opportunity for growth. What are you hearing out there? Are you guys ramping up?

Jon Boyle (22:43) Mm-hmm.

Yeah, certainly want to pay attention to any of stuff, you know, and I think you start peeling the onion back and why are they going there in the first place? you know, like, look, there's no income tax. Long-term residency is not an issue. Getting a visa to stay there for a while with minimal restrictions, pretty easy to do. Very favorable business environment.

You've got a very skilled workforce with very little regulation to promote business growth there. And, you know, with that, you've kind of seen some pretty major corporations take their headquarters and move it to the UAE. Halliburton did it back in 2007. I'm not sure that's a great example to use, but, you know, more recently you look at, you know, like the Fairmont group of luxury hotels, you know, they moved their headquarters from Paris to Dubai. You so you see a bunch of people doing this because it's such a favorable

Jessie Naor (23:35) Mm-hmm.

Jon Boyle (23:49) economic and business environment. And then, know, from a geographic standpoint, it does kind of like it sits halfway in between the East and the West. You know, so it makes like fairly logical standpoint. And then, you know, if you're somebody that's trying to move a headquarters or even just move a family, you kind of get to brag about the luxurious lifestyle from a shopping and dining and yeah, exactly. Yep. The healthcare and education. So

Jessie Naor (23:58) Right.

Beautiful malls and amenities. It's amazing.

Jon Boyle (24:17) It's kind like the snowball effect, right? You list out, you see all those attributes. And if you're a high net worth individual and you're going, geez, like this is a pretty favorable place to live. And they do it. Like the more people do it, the more people look at it the more people look at it, the more people will execute it and doing it. you know, certainly something to pay attention to. And, your question was, are we ramping up? And of course we're always looking for like the next hotspot of where, can we sell fuel? And, and I'm not, this is nothing against, you know, that

what's going on in the UAE here, like really it's like, gosh, you just sometimes you gotta keep your eyes on the prize. Even with the growth that UAE is experiencing with private aviation, it's just dwarfed by what goes on here in the United States.

Jessie Naor (24:55) Yeah.

The US

and Europe is still substantially larger. The Middle East private jet market today is valued at 566 million. It's expected to grow to almost a billion over the next five years. But in comparison, the US is still 24 billion today and Europe is 4 billion. They are growing, but they are still pretty small in the grand scheme of things. But I thought it was interesting going back to our-

Jon Boyle (25:10) Yeah.

Jessie Naor (25:24) previous story about all these regulations that are going to be coming in for SAF and reporting that you that's not the case in the UAE and the Middle East. So other reasons why people move companies, know, regulations like people have legs, especially when you're talking about people with the means to do so and the means to travel when they want to travel.

Jon Boyle (25:31) You

Mm-hmm.

Yeah, exactly. look, there's plenty of movement within our industry here and not just in UAE. You look at neighboring Saudi Arabia, they've got a handful, terminals being built exclusively for private aviation. You look at...

Jessie Naor (25:56) big turpitals. There was a $100

million project announced last week alone. Yeah, huge.

Jon Boyle (26:00) Yep, I actually going to bring that up. Gama

UK company Gama investing $100 million in a new facility in that Sharjah International Airport there. So, it's certainly not something to ignore and quite an opportunity if you can find the right niche and the right way to do it over there.

Jessie Naor (26:04) Mm-hmm.

so looking at 2025 while we still have our fuel guy here.

I wanted to get an understanding for our listeners, what do they need to look for next year? What have we seen over the last year with fuel pricing? And I like to say it's like good water cooler talk. Like if you're thinking about what's going on at OPEC, what's going on at the Permian Basin, what are the things that people need to pay attention to, which will impact our costs moving forward in the industry next year?

Jon Boyle (26:44) Sure. You know, it's felt like we obviously get this question a lot, like what's going to happen next year? And I can tell you, if I could answer that question with any certainty, we'd be conducting this interview on my yacht in between my rounds of golf today. And so, but it's a valid question and there's certainly some things that we can look to, you know, kind of before you can look ahead, you got to look a little bit back. So if we look at 2024, you know, welcome to news for

Jessie Naor (26:52) Okay.

Jon Boyle (27:09) for operators and FBOs alike, fuel prices down about 64 cents a gallon on average from the beginning of the year to the end of the year. And so when you look at kind of like, why did the prices fall? Well, you look at like, well, they rose in the first place because of some disruptions in the Middle East, right? And yeah, there were some cargo companies and ships that weren't all that wild about driving their cargo vessel full of jet fuel through the Red Sea.

Jessie Naor (27:13) Mm.

Mm-hmm.

Jon Boyle (27:36) All the while, Chinese

exports stayed pretty limited. And then, you know, in the second quarterish, prices came down as global inventories because of that lack of movement started to build in the Middle East and Asian refineries increased their capacity. And then the summer months hit where we saw some pretty incredible demand. But even with that demand, it was still overpowered by the supply.

and exports out of India and the Middle East. And in general, if you look at kind of what happened this year, jet fuel production was up about 6%, but demand was only up about 5%. And when you look at jet fuel inventories across the world, they were up about 8%. So anytime, obviously, the supply is outpacing the demand, our buddy John Locke would tell us that's when we see prices go down.

Jessie Naor (28:16) Yeah.

Jon Boyle (28:32) So that's just kind of a look back. know, when we look ahead to 2025, some of the factors that people can pay attention to that will impact the price of Jet fuel is, you you said earlier, what is the, you know, the OPEC countries, what are they going to do? What's their policy going to look like? Are they going to keep production the same? Are they going to increase production, decrease production?

Jessie Naor (28:49) Thank you.

Jon Boyle (28:54) And then what, what ended up being the, the geopolitical events that might cause some supply shock?

And so closest to home here, you know, you've seen kind of Trump's proposal to tariff imports from Canada,

Well, most people might be surprised to learn that almost 20%, a little over 20 % of the oil that's refined in the United States comes from Canada.

And more specifically, if you look at like the middle of the country, so kind of like the Chicago Midwest markets, almost 90 % of the jet fuel that's refined or the crude oil that's refined in those markets comes from Canada versus about 10% in the New York market. So 10% of the crude oil that's refined comes from Canada in that New York market. The rest of it comes up the colonial pipeline from Houston or from Europe.

Jessie Naor (29:32) Okay.

Jon Boyle (29:52) which of course doesn't have the tariff here. So if these tariffs go into effect, we could see jet fuel increases from about 30 to 40 cents a gallon, kind of in the Midwest in that Chicago market area, or 10 to 20 cents in that New York market.

Jessie Naor (30:08) Wow. That's substantial. Yeah, I mean, that was kind of shocking to me, you when I started to look at, who's really producing our fuel? Where is it coming from? The US, you know, has finally become a net exporter of fuel (oil) for the first time since 1949.

a couple years ago. it seems like from Trump's policy perspective, he's drill baby drill, you know, let's increase. But that's interesting to hear that. mean, look, even if you are increasing capacity, there's still a bottleneck with pipelines, with delivery, changing where it's coming from and where it's going.

Jon Boyle (30:22) Mm-hmm.

Well.

Yeah, and you just you said the million dollar word there was the capacity and you know, the US refineries are pretty much operating at capacity. And so the only way to increase that capacity would be to either build more refineries, you know, or there's there's some that are still kind of shuttered from 2020. And so that'll be that'll be interesting to follow along with, too. mean, think oil companies were maybe a little hesitant to

to open up refineries that had closed with the current administration had almost threatened to leverage massive taxes on profits from the oil companies. So that was certainly not inspiring them to develop new refineries or open old ones. But with the new administration, you might see the exact opposite. They may be very incentivized to build new refineries or increase the capacity of their existing refineries.

Jessie Naor (31:32) Yeah, so it's something I learned a couple years ago to pay attention to was heating oil prices. mean, so and I think that's what you're referring to as the same people that are refining jet A or the people who are refining heating oil. So pay attention to what your fuel bills are this winter that may give you a good indication of where we're directionally heading on the jet A side.

Jon Boyle (31:36) Yeah.

Mm-hmm.

Yeah, you're spot on it's a it's a great indicator of jet fuel pricing. Yep.

Jessie Naor (31:56) Yeah, well, very interesting. I guess we'll just have to see what's going on politically. And I feel like just nothing happens as quickly as we want it to, though. Like even if we say, OK, turn on all the pipelines tomorrow and everything, like it's just not we're not magically going to have like a 50 % decrease in energy prices, even if we would want them.

Jon Boyle (32:14) Yeah,

no, nothing happens overnight, especially with the government. And so I, you know, I think more than anything, you know, I think I was sharing with you at dinner a month ago or so that I think what we can expect here in general is finally maybe some stability again, pending any massive unforeseen geopolitical events. We saw a nice drop in prices this year, which is great for again, the end user, the FBO community. But

But it's really the stability I think that everybody's looking for. I think we're, the conditions right now are kind of ripe for that, for that stability.

Jessie Naor (32:50) Yeah, great. Well, with that, we're going to wrap up the pod today. We like to keep things short and sweet for your morning commute. Thank you, Jon, so much for being with us today and giving us the skinny on what to look for in fuel next year.

Jon Boyle (33:02) Of course,

know, Jessie, before I go, just want to wish all the listeners out there Merry Christmas, Happy Hanukkah to those that celebrate next week. I think as we look forward to 2025, Jessie, you and me, people like us, we're pretty lucky to be in this industry. We certainly have a lot to be optimistic about. And I just can't thank you enough for having me on the show today.

Jessie Naor (33:21) Absolutely. No, it's been fun. I'm really looking forward to continuing the show next year with all sorts of different guests, with all sorts of different backgrounds and ideas and perspectives. This is honestly so much fun for me. I just get to talk with people that I respect every week, so it's really fun.

So everyone, Happy Christmakuh, as I like to call it. I celebrate both. We'll see you next year.