Oil falls on U.S. inventory build, eyes bailout plan

（Source from http://news.yahoo.com/s/nm/20081001/bs_nm/us_markets_oil)
Summary
After Hurricane Ike on September 13, the oil-rich U.S. Gulf of Mexico continued to recover from disruptions caused by it. Oil demand from industrial economies have drop 7.1 percent from the last four weeks and the price was above $147 a barrel in July. On October first U.S. crude settled at $98.53 a barrel, down $2.11 at the same time London Brent crude settled down $2.84 at $95.33 a barrel. After this horrible disaster the U.S. crude oil inventories was still able to rise 4.3 million barrels last week and that's 900,000 more barrels greater since the 2005 hurricane season.

Connection
The connection between this news and this chapter is COGS. The Price of oil is the main factor that affects the freight-in account which is the cost of delivering merchandise. The lower oil price the lower cost for the transportation and the result would end up with the increase of the Gross Profit and net income. Also, the merchandise business would have more options of choosing transportation ways which is more continent and efficiently. For example air plane, truck, or ship.

Reflection
This Article gives me some new idea about COGS. As many of us know the formula of calculating COGS is Cost of beginning goods plus Cost of merchandise purchased and Freight-in and minus Cost of merchandise and Freight-in account is used to accumulate any transportation charge on incoming goods. Therefore increasing or reducing one of these accounts is going to affect the entire calculation. So to have a cheaper trucker deliver for you would give you a higher profit. But the main idea about transportation is all about location and oil fee and without gasoline location is only a joke. A business with many different transportation lines will have more options and control of their inventory system.