High Energy Prices Pressure Small Businesses

Most small businesses operate on a thin margin of profit. Even relatively small increases in their operating costs can make the difference between profitability and a loss. Many small businesses have considerable local competition and often don't feel they can raise prices.

That's why high gas prices are such a big issue right now with small businesses in the United States. With gas prices averaging $2.30 per gallon, businesses with fleets and delivery vehicles are under pressure, as this article in the Daily Democrat notes:

"Rising gas prices are hitting small business people hard, especially taxi drivers, companies with small fleets, fast food delivery drivers and others, said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. Kyser said he has heard of at least one florist who has restricted its delivery area because of fuel costs."

It's not just small businesses -- independent contractors also feel the pinch:

Luis Martinez, for example, is paid 75 cents for every Domino's pizza delivery he makes in the San Fernando Valley, on top of his hourly minimum wage. And the delivery compensation hasn't changed, he said, which is a problem because of the hills his 1995 Toyota Tercel must climb -- and the gas that uses up -- to make some deliveries.

And if that weren't enough, there is also the problem of high natural gas prices, which puts special pressure on restaurants:

Jo Binanti was searching for a job Wednesday before heading to her job operating Binanti's Italian Restaurant with her husband, Salvatore.

The reason was simple: She needs a second job during the day to afford the natural gas costs needed to keep the couple's 10-year-old restaurant at 2411 Main St. in Caledonia open at night.

"I don't know how small-business owners are going to make it. How can you make it?" she said. "We are going to have to get jobs. There is no other way."

The Binantis are facing monthly natural gas bills as high as $1,600 in the winter and $900 in the summer to heat their business and power ovens that cook pizzas and other Italian entrees. Their 3,000-square-foot restaurant seats 100 customers.

The NFIB has been following the issue and is looking for feedback from small businesses feeling the pinch of higher energy costs.

The subject is so important to small businesses that President Bush plans to talk about energy at Small Business Expo this week.