Well, no wonder. I filled my gas tank up this morning in San Diego. It was $4.21 for a gallon of regular unleaded. Premium gas was well over the $4.50 mark. And it’s only March! Yikes! Gasoline prices typically fall in the winter and rise in the spring as refiners switch to more expensive summer blends of gasoline. Since 2000, prices in May have been 52 cents per gallon on average higher than in February, according to the Energy Information Administration. Right now, California averages the most expensive fuel at $3.90 per gallon.
High gas prices can be a tough burden on small businesses. The recent surge is now putting pressure on already-price-conscious consumers and small businesses that rely on fuel to keep their businesses up and running. The situation is forcing tough choices on small-business owners who are reluctant to charge more for fear of losing cost-conscious customers.
There is a psychological effect of increased gas prices, as it creates more uncertainty and anxiety for small businesses. No one knows how high gas and oil prices will go. For example, Blank Label, a company that sells customizable men’s shirts, told Inc Magazine that they have already seen quarterly 10-15 price increases from DHL, their shipping partner, in addition to higher input costs from the rise in price of raw materials.
Like many retailers, Blank Label is seeing the rise in the price of gasoline affect their bottom-line. “There’s definitely quite a bit of margin pressure,” says Fan Bi, the company’s founder.
Many small businesses are reluctant to rise prices, out of fear of losing existing customers or new business. Bryon Gongaware, an owner of The Floral Trunk and Gifts in White Bear Lake, Minnesota, told The Washington Post that he has kept his $7 delivery charge constant through the price increase. “I don’t think the economy is solid enough that you can be careless about raising prices,” he said.
According to KETV, CM’s A Cut Above, a private lawn service and snow removal company, predicted the increase in gas prices a few months back. In January, the company installed a GPS fleet tracking system in 35 trucks to increase business efficiency.
”That allows us to track all of our trucks 24/7. We know where they’re at. We know how fast they’re going. We know if they’re on their route or off their route, which can save us money, which saves our customer money,” CM’s A Cut Above co-owner Josh Scearcy said. The company’s new GPS fleet tracking system has helped to keep service fees down, Scearcy said, at least until gas prices take another hike.
For more information, see the next FieldLogix Gps fleet tracking system article….What can a small business do about rising gas costs?