Your earlier question got me to contemplating what would happen if oil did drop significantly in price.
As I noted earlier, JBI competitors in the plastic to oil biz will go under long before JBI because their margins are much smaller, which makes them far more sensitive to the price of oil.
JBI might have to reduce the price of it's product to keep selling it, but with the large margins JBI has that would reduce earnings, not put the company in the red.
The unexpected consequence would be that when JBI competitors have to curtail or cease operations, all of the plastic that was going to them now has to go to a land fill with the attendant tipping fees. That will open up new opportunities for JBI.
At present, JBI has locked up plastic supplies with agreements to take the plastic at no charge. A similar strategy as getting the first large sales contract at a good but discounted price. That gets JBI established and assures an immediate market for it's products. There is nothing that says JBI must continue to accept plastic for free.
The point here is that if oil price falls, there is going to a lot of plastic looking for reduced tipping costs. JBI will be in an excellent position to accept plastic at a reduced tipping fee, thereby improving JBI margins to account for much of the lost margins due to lower fuel prices.
Thanks for leading me to than line of analysis. It gives me a greater confidence in the JBI business model and it's robustness.
Market Data 
Markets 
AI
