This only freaking applies if you can get your oil at 33% above normal price and sell your product at 33% above normal price.
this would minimize your fixed costs.
However, with a 33% jump in your sales price, you will have increased competition.. and an increase in pressure for you to sell at only say.. 30% increase in price.
so you are not going to want to pay that much more for shipping the same stuff.
=============== Re: Saudi Oil - what next? by: gmckillip2004 08/11/04 12:59 pm Msg: 13394 of 13403
With all do respect, the price of the oil does matter. The higher the price, the higher the net profit as the fixed costs remain the same. Thus with higher margins, the shipper is willing to pay higher transport rates.