04/12/2005
As gas prices continue to climb, no one’s feeling the pinch more than small business.
Just ask Tom Lucas, owner of Performance Nursery in Redondo Beach, Calif. After filling up 21 delivery trucks and 20 more gardening vehicles each week, he’s feeling the gasoline squeeze full force.
“It’s increased cost and a lack of profit,” said Lucas, who has increased his business five-fold – from $1 million to $5 million in business annually – since the gas prices started to climb. “I’ve increased the amount of business I do, but my profits have stayed the same.”
And with the government predicting that gas prices will continue to climb, Lucas won’t be able to curtail his long hours any time in the immediate future.
According to the Energy Information Administration’s April Short-Term Energy Outlook Report, unleaded regular gas price is expected to stay on its upward path until May, when analysts predict it will peak around $2.35 a gallon. The report said unleaded regular gas will stay at an average of $2.28 per gallon through the summer months until September.
While larger companies may simply tack on an additional charge to compensate for the increase in gas prices or have larger capital reserves to compensate, smaller businesses like Lucas’ nursery are squeezed.
“Here there are too many nurseries all fighting for same customer; if I increase my prices, they go to one of my competitors,” Lucas said. “I tell my employees that someone else will own this company if we don’t start paying attention.”
While Lucas can’t up his prices, he can encourage his employees to do their part to save the company money on gasoline. To encourage his workers to save some money at the pump, Lucas rewards the employee with the cheapest gas receipt a $10 bill.
But Lucas said that his small business can’t hold out under the pressures of increasing gas prices forever – he said he hopes to see an energy bill passed that will help alleviate some of the burden of gas prices.
In the meantime, he said he’s doing the best he can to stay ahead of the game.
“You need to create additional volume, work harder and work smarter,” he said. “If you don’t, that’s when it takes your business.”
How are rising gas prices affecting you? Tell us by e-mailing grassroots@nfib.org.
