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High Gas Prices: Who are the Biggest Winners and Losers?
Small-business owners speak out about how gas prices are affecting their bottom line. Who's getting hit hardest ... and who's actually benefiting?
Posted 5/ 17 11 at 6:30 PM | Business Trends, Money, Business Travel, Energy, Logistics & Transportation, Retail
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With gas prices near a three-year high, and the current national average at about $4 a gallon, it's difficult to find any business not affected by gas prices. While some reports have suggested that gas may go down over the summer as demand drops, many small-business owners nationwide are nonetheless making major adjustments based on the onerous gas prices.Let's take a look at some of the losers and winners in our oil-based economy.
LOSERS:
Retail stores. Sherri Comstock, who has three Grayslake, Ill.-based brick-and-mortar stores -- The Cheshire Cat, The Spotted Crocodile and the soon-to-open Foodie -- says gas prices "have caused the wholesale prices on many items to increase, and shipping costs like UPS surcharges have gone up due to the high cost of oil." But she adds the price goes beyond that: "There are the soft costs, like fuel costs driving from our warehouse to the stores."
Business travelers. Comstock also says "the costs of employees' airfare, meals and hotel to events like the gift show in Atlanta and other out-of-state vendor training events are eating away at my bottom line now." Kenneth C. Wisnefski's Mount Laurel, N.J.-based SEO company, WebiMax, has 125 employees who travel frequently. He's constantly telling his workers, "Not every sales meeting is a guarantee for new business, and since we're paying the extra money for gas reimbursement, make sure you close the deal."
Catering companies. "The fluctuating gas prices substantially impact our company," says Tom Walter, CEO of Chicago-based Tasty Catering. "Our business relies on being able to deliver affordable, quality food to Chicago area corporations." In late 2010, Tasty Catering retired their four oldest vans and invested in four new fuel-efficient Ford Transits, which will save the company $18,000 a year. Walter also says they recently tinkered with the way they do deliveries, switching from 15- to 20-minute delivery windows, so they can fit more food on a truck and cut back on driving time. And in recent months, they've been forced to raise their prices, on average by 8 percent, for the first time in two years.
Trucking-related businesses. Armstrong Relocation, a Dallas-based company and one of the nation's largest relocation firms, reports the number of staff drivers is down 15 to 20 percent because they're all independent contractors who pay for their own fuel. To help them out, Armstrong's president Mike Gonzales recently agreed to cap the price the drivers pay for fuel -- and the company is paying anything above that.
Small oil companies. The major oil companies are doing very, very well. The five largest oil companies -- Exxon Mobil, Shell, ConocoPhillips, BP America and Chevron Corp -- get $2 billion annually in tax breaks, and their profits are mostly up (BP's are down 2 percent due to the oil spill, but Exxon Mobil's profits are up 69 percent from 2010). For all the money rolling in, the higher gas prices have turned into financial cash flow migraines for smaller oil companies, such as the Pacific Heating Oil Company in Seattle. Calvin Caley, president of Pacific Heating Oil Company, says, "When I purchase from my suppliers, they take payment from my checking account within eight business days. Now, many of my customers cannot pay for 60 to 120 days more. This disparity between when I must pay and when my customers do pay affects my business, my employees, my family and me -- especially when prices go upwards so sharply. If consumers don't like the price of oil then neither do I -- multiplied by all my customers."
Grocery/meal delivery services. According to Zalmi Duchman, CEO of Surfside, Fla.-based company The Fresh Diet, as much as 95 percent of the cost of running a fresh meal or grocery delivery service is related to food delivery costs, so he and other similar companies have been especially hard hit: "As gas prices have gone up, our weekly bills have risen with them. To combat the negative effect, I had to act quickly, so I actually cut my prices. I sent a personal email to current clients giving them the opportunity to lock in deeply discounted meal prices for as many months as they would like. As a result, some of my customers [prepaid] for as much as two years' worth of my service."
Food trucks. The average food truck has a 20-gallon diesel-guzzling gas tank, gets 10 miles per gallon, logs about 50 miles daily and operates for approximately 25 days each month. Obviously, high prices at the pumps can cut deeply into food trucks' bottom line. But are proprietors raising customer prices? Jackie Valent Lucca, owner of the Milwaukee-based truck The Fast Foodie, says she has made the conscious choice to keep prices steady and explore creative business practices and fuel alternatives. "Because we know gas prices affect our customers, too, we're taking the hit right now. We're also exploring the option of converting our generator to propane, which would reduce our costs from $4-plus per gallon to $3 per gallon and also help the environment. Another thing we are doing is serving office parks inside the lobbies vs. taking out the truck. We do all the cooking at our base kitchen and then serve inside the buildings, which eliminates all the fuel costs attached to running the generator."
IT/tech consultants. Many IT entrepreneurs regularly drive out to work on-site, a practice that can add up at the pumps, especially for those with wide service areas. Industry experts at Raleigh, N.C.-based small-business financial analysis firm Sageworks, Inc. predict that as teleconferencing and videoconferencing software continue to mature, IT consultants could ultimately stay close to their clients, even if they're taking less in-person meetings and going on fewer service calls. Elizabeth Hannan, owner of New York City-based digital consultancy Blue Blazing Media, has been taking advantage of advanced technology solutions to communicate with her clients since gas costs went on the rise: "To save on gas, we have maximized on virtual phone conferences using Skype or WebEx, allowing us to continue to offer a diverse menu of services to our clients."
Florists. Everyone involved in this industry -- from growers to wholesalers to independent flower shops -- relies heavily on shipping to ultimately get flowers to customers. And because shipping costs can vary significantly even on a daily basis depending on gas prices, the cost trickles down to the customer. Many flower shops have tried to avoid increasing their prices significantly by getting more selective about or decreasing their service areas and the amount of deliveries they do per day, charging higher prices on big flower-related holidays or by charging a higher minimum for what they'll deliver. Scott McBride, manager of Toledo, Ohio-based florist Myrtle Flowers & Gifts, increased delivery rates last month in anticipation of the high volume of orders for Mother's Day. "If gas prices rise significantly, we might consider another hike," McBride says. "But we're going to try and keep them as low as we can for as long as we can."
Lawn care companies. Landscaping and lawn-mowing businesses could also experience pain during the summer months if gas prices stay high. Gas prices make up about 15 to 20 percent of lawn care companies' budgets. Ultimately, many companies may have to decrease their service areas or give up some of the higher-paying customers who have bigger lawns or more complicated landscaping needs. And because cutting grass and planting/landscaping gets highly competitive, most small companies have very little wiggle room when it comes to increasing their rates to make up for inflated gas prices. Chattanooga, Tenn.-based lawn care and landscaping business strategy company StartALawnCareBusiness.com notes that even if gas remains expensive, lawn care companies can still do a lot to get the most out of their fuel, including keeping vehicles and equipment in good repair, minimizing service areas to avoid long driving distances and being diligent about planning daily schedules.
WINNERS:
Bike shops. According to recent analysis by Boulder, Colo.-based retail tracking firm Leisure Trends Group, sales of new bikes rose 9 percent in the first four months of 2011 compared with the same quarter in 2010, and road bike/commuter bike sales increased by 29 percent. While these numbers aren't necessarily directly related to the gas price hike, shops in cyclist-friendly cities like Portland, Ore., have seen big differences. Melinda Musser, communications and marketing manager at Community Cycling Center in Portland, says, "Our May bike shop sales are shaping up to be the best since 2008." Mychal Tetteh, director of shop operations, believes more people could gravitate to bikes as alternatives to cars: "We have certainly seen more people in our shop for transportation and utility purposes."
Cloud-based companies. Michael Knight, CEO of Fox Valley Technical, a Hampshire, Ill., consulting firm specializing in technical solutions for companies, says profits are up because his firm helps businesses find ways to hold meetings online. "When fuel costs went berserk, my clients couldn't absorb the escalating travel costs to hold their board meetings in person. For my business, the result was an uptick of 80 percent in queries received and sales on products like Microsoft's LiveMeeting, a cloud-based meeting service," Knight says. "Going forward, I anticipate cloud-based solutions will continue gaining in popularity due to their 'connect from anywhere, anytime' environment, and we will see an [increase] in virtual companies, employees working from home and staff working four-day workweeks to save on fuel costs."
Alternative energy businesses. Deep Patel, founder and CEO of online alternative/green energy company GoGreenSolar.com, says rising fuel costs have helped his business flourish. "When Americans feel the pinch at the gas station, GoGreenSolar.com's call volume and sales instantly surge," he says. "More consumers are looking toward electric cars to get around town, so more are interested in our electric vehicle chargers. High gas prices are also great for our business, because they make the payback on green energy products much more competitive than when traditional energy prices are low."
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Comments (Page 1 of 1)
The real reason for the higher oil prices are the speculators. The big corps. control this market and the Government does nothing. The other reason is greed of the oil co's. who control the refineries and can create an inflated problem. Our nations being distroyed by these greedy creeps and we have a worthless Government who is in on it too!
You are a dumbass liberal
There's 3 things we can do to lower high gas and oil prices.
First, make congress pass a law making oil speculation and futures trading on the stock market ILLEGAL!
Second, nationalize the oil companies like other countries have done. Government-controlled companies WILL ELIMINATE price-gouging at the pumps and take the greedy oil companies out of the picture.
Third, develop renewable energy to replace oil, and develop new materials and technologies to replace oil in the manufacture of products.
Until we do these things, we will continue to be at the mercy of the greedy oil companies - who don't care about anything execpt increasing their profits at everyone elses expense.
Sounds good nut how would you spread the word nation wide?
Yeah nationalize everything so we can be just like China.
Boycott two gas comopanies and they will drop the prices.
SHELL and BP. Let's see what happen.
That has nothing to do with it.
the government and media are one. we have no say.they decide what is even allowed to be discussed(for example no media ever comes out against the wars we are involved in around the world, i am not saying they should or shouldn't.but don't you find it strange not ONE newspaper,tv or radio network or even ONE reporter says a word?) how about the no inflation lie? everything i buy is going up. food fuel taxes tolls etc. better yet the reporting that we will not have another recession! i didn't know this one was over. they are all zionist blowjobs.look at out charlie sheen,you can do or say anything,that is until you used the "J" word as in jew.your career is over. i will miss you
how about outlawing all oil imports in 10 years.that will force alternative solutions.
Articles like this are why I can no longer read AOL Small Business "news". It's complete BS. "Let;s take a lok at Some of the losers?" Under that "Losers" category how about Every Small American Business and Citizen who wants to buy a product?
Not one word about how badly Americans are hurting, or how the preisdent and congress could have allowed domestic oil drilling right after Obama was elected.
And still, we hear only a few real newsworthy related reports about how America can lower gas prices.
How much is George Soros' companies paying AOL so you can write this nonsense?
I disagree.. Most of you want to basically NATIONALIZE OIl/Energy..
If that is not handled properly, like they do in Brazil? IT would be a Disaster.. and how confident are you at letting Congress /Gov't control it..?
1. Lets see some Real Competition among themselves.. Btwn the Oil Companies..Not Fixing Prices.. and they all stick to it..
2. Federal and State Taxes are over 50 cents a Gallon and let's see that $ going to what it's SUPPOSED to go to> Transporation. Hwys/Roads/Bridges and not into the General Revenue Fund
3. Surcharge for Gas Guzzlers.. Right now, the Guy getting 12 mpg is paying the same Price per Gallong of fuel as the guy getting 18 mpg..and thus? Is being Subcidized . The Gas Guzzlers rerquire us to have to Import 26% more oil, Create More Refineries and more Transportation cost...
The Gas Guzzlers should be like in Europe does, Anything over the average Median Use of 10 Gals of fuel and you pay a Surcharge of 10% more Per Gallon.. It brings the the 1st 10 gals cost down by over 25%...
4. Same should be done with our Homes energy.. Elec and Gas.. Anything above the Average Median Home uses cost More.... Right now? The Little and Ave. Size Homes are Subcidizing the Big Homes and bigger Consumers.. so they can pay the same Cost per KW and BTU.. It cost more to build Bigger Plants because of those Bigger Homes and guess who has to pay for it? The Smaller Homes..
What's the Ratio of Small & Ave. Size homes vs the Bigger one's? 6-1?
You have already heard how the utility Co.'s "Have to build bigger Plants to provide more Electricity" and guess why? We have more Bigger Consuming Size Homes, not more homes..
They say we have about 1 Trillion Bbls of Oil under The USA's Control to Drill.. enough for the next how many Decades? and howlong will it take to have A Real Alternative Energy program in place that takes over just 33% ?
5. Get on the Auto Co.'s.. We already have the Engines to give us 50% better MPG, They just don't want to Make them STANDARD, they want to make the Bigger Engines and add more Options So they can make More $! In erope the standard engine is a 4 Cycl. not a V6 and it comes with Half the Options.. Do our Cars need those VV6 engines and 17" Fancy Wheels and Tires that cost twice as much? And why can't we get the same 4 & 6 cycl. Diesel Engines in our cars as they can in Europe?
They can't make as much selling them n profits, vs the V6 engines and With all the Options they made standard now.. 80% of our driving is City -Local Driving.. what good does it do to have a V6 Engine and a Car that can do 120 mph? Then why are we Providng the Bail out $ for GM to make those Faster , High Performance Cars? They used over 25% of Our Bail out $ to build them you know...
Alot more Energy Effecient Homes.. 6 Inches of Insulation of the Higher Density Polyfoam in the Walls, Tripple Glass Windows ( Double with a Sliding Storm window) R 12 Storm Doors and R50 in the Attics..with CFL's and Electric Hot Water heaters with Timers on them.. They make the same for Nat. Gas HWH but they won't sell them.. Do you really need your HWH heating the water 24 hrs a day? Guess how many hrs a day? Try only 4 hrs combined... 2 in the AM and 2 in the Evening..We've been heating our HW the ave of an extra 20 hrs a day for nothing! and all it takes is a simple Timer.. And you don't need a HW on Demand System either.. they cost Twice as much..
LED's? Are a Con Game.. They are Monoploizing us with them, trying to force us to only have them by Banning Incondessants Next Yr.. Do you want to have to pay 10x as much for a LED Light Bulb? Just like they got away with getting rid of our Old TV's and forcing use to buy these New one's for 3x as much! And Guess who is behind this? GE, that's who.. another Company that went Broke and we bailed out..
They make LED's for 10% of what they sell them for..so why sell them for 9x more? GREED that's why! And as long as they can get Congress to ban Their competition? They will get away with it..
How about $10- 50 watt Light Bulbs and $20 for a 100 watt LED? Get ready for it..
I'D JUST LIKE TO KNOW..
HOW COME GAS PRICES ARE THE SAME IN MY TOWN? WHAT EVER HAPPENED TO COMPETITION?
IF IT COST MORE TO MAKE MORE? THEN HOW COME THOSE GETTING 15 MPG ARE PAYING THE SAME PRICE FOR GAS AS THOSE GETTING 30 MPG?
AND HOW COME OVER SOME 75% OF THE PRICE OF GAS IS FOR TAXES?
AND THOSE TAXES WERE SUPPOSED TO GO FOR TAKING CARE OF OUR ROADS, HWY'S AND BRIDGES AND CREAT ALTERNATIVE ENERGY BUT IT ISN'T! IT'S GOING INTO THE FED'S AND STATES GENERAL REVENUE FUND INSTEAD!
LET THEM HAVE A DEM. PRESIDENT, WE JUST NEED A REPUBLICAN CONGRESS..! THAT CONTROLS THE $...
ADN THOSE THAT USE THE MOST, PAY THE MOST! NONE OF THIS SOCIALISUM BALONEY!
YOU PEOPLE LIVING IN YOUR AVERAGE TO SMALLER HOMES? YOUR SUBCIDIZING THE BIG HOMES SO THEY DON'T HAVE TO PAY FOR MORE ENERGY THEY USE! ISN'T THAT NICE?
its treason} most of the gas stations have been bought in the last year by a investors now they are so bold they dont care what they pay for it they charge what they want an screw us. they are out of control its like they got my check book
an are going wild with it. i own a small oil co the day after oil broke 100 a barrel i deleverd oil 35cents a gallon cheaper. gas was down 42 cents we havent seen a penny at pumps maybe even up a few cents i could write a book on the corruption its all specultion an greed . sometimes my price will go up 3 times in a day but has never came down in the day up to 15cent a gallon swings. i thing if they want to gamble thats fine do gold an things we dont have to buy to survive. i dont care if i dont have to buy it .let the gamble between themselfs we dont have to buy it.but iol gas beard milk food will distroy us.
Go to RobTKramer.com and click on "1/2pricegas" I am gettin $195.00 per month in rebates
Go to RobTKramer.com and click on (1/2 pricegas). I am getting $195.00 per month in rebates
Remember.. It's all Bush's fault.
what did you do eat a shit sandwich high gas prices helps no one
We've had the chance to drill for oil on our own lands and off shore, we did not. We get most of our oil from Canada and Mexico, NOT the Mid East. Had we drill years ago, we would not be having this conversatio, but we did not. We just gave Brazil Billions to drill of their shores, and Mr. Obama stated when there that we will be one of their biggest customers. Why aren't we our own biggest customers? High gas prices helps no one, it hurts people who drive to work, it hurts business who depend on people go there for vacations or to buy. Everyone is worried that Grandma will go under the bus, Well it's our Children and Grand Children who will under the bus, and we're helping by not demanding the Government to STOP spending and start fixing the Economy and get Americas back to work.
The rising oil prices are due to the devalueing of the dollar. Inflation is to blame 100%! If you wnat speculators to work for you instead of betting on a future of hyperinflation and "neccessarily skyrocketing" oil prices then stop the DEBT! With 1.5 trillion of debt in circulation and another 4.5 trillion set to come out don't expect speculators to bet on a future where oil prices fall. The oil prices are 100% Obamas fault! Speculators bet on the future of a market and the future is $6-$8 dollars per gallon as the rest of the debt comes out. There is nothing you can do as long as we have an Administration who has an energy policy where in Obamas own words "prices will skyrocket".