Friday, September 09, 2005

How do Gas Prices Affect Small Businesses?

In 1999 the average retail price of a gallon of gas in the US was $1.05. Now gas has peaked at over $3.00 per gallon in most communities over the last couple of weeks. This is devastating to small businesses, especially to small businesses that have any kind of delivery service.

When gasoline prices go up, many other products go up in price as well. These price increases come to offset the cost of fuel. When a small retail business buys its products at wholesale to resell them they are paying more upfront. Then the price increase gets passed on to the consumer making it harder to sell the items that you perchased. Then if you have a delivery service you have to initiate a delivery service fee, which only adds more cost to the consumer.(Who has to use gas to get to your store in the first place.)

In the article one suggestion made by small business owners is to just raise prices. This seems like a simple solution, but by raising prices you discourage purchasing by the consumers and many consumers already feel the crucnh by the rising gas prices. Is there a solution to this problem?

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