Business braces for rising gas prices

It’s one of the most visible commodities and its price affects us every day: Gasoline.

And experts predict that small businesses will be hit this summer by a gas price spike that will be high enough to raise the everyday costs of doing business.

Already, gasoline prices are surging — according to Gas Buddy at the end of March, prices were up nearly 80 cents compared to the same time in 2020, and trend lines are expected to continue to spike upward. Prices could reach a national average of $3 per gallon by Memorial Day, according to the Miami Herald. The price spike is part of a long, slow rise that has been building since gas prices bottomed out in early May 2020, when the COVID-19 pandemic sent demand plummeting.

Rising gasoline prices raise overhead and the cost of doing business, which cuts into profits. With that tension, something has to change. Either product will change, prices will rise or services will be cut.

Small businesses will find trucking costs rise with the dreaded invoice line: Fuel-related increase. Businesses such as brick-and-mortar furniture stores will immediately see higher trucking costs and higher costs per item.

For businesses that rely on a fleet, be it one or 100 vehicles, higher gas prices could require some changes in service areas, vehicles, or services, according to the Houston Chronicle.

The smallest of small businesses, like food trucks in Los Angeles for example, have experienced gasoline prices over $4 since 2019. In response, they cut their routes and parked in their most lucrative locations.

Raising prices in competitive markets might not be the first choice for businesses. But as overhead continues to rise, some changes are inevitable, whether in the workforce, product quality, or consumer prices, according to the Houston Chronicle.