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Does $100 Oil Kill All Business Activity?

No.  But at least some busi­nesses are hurt less than others.

High oil prices tend to trig­ger a so-called “neigh­bor­hood effect” where selected man­u­fac­tur­ing busi­nesses that are located closer to their cus­tomers get a price advan­tage over com­peti­tors that are located far away. That is because local busi­nesses have lower trans­porta­tion costs than their out of town, or out of coun­try, competitors.

It’s loca­tion, loca­tion, loca­tion that dri­ves the rel­a­tive cost of ship­ping cer­tain types of goods. A supplier’s close loca­tion to his cus­tomers will result in low trans­porta­tion costs.

The rest of this arti­cle can be found at the Huff­in­g­ton Post at  The Small Sil­ver Lin­ing Of $100 Oil.

Posted in: economy, Energy, Oil, Public Policy

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