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Rising Gas Prices : Summary


According to The U.S. Department of Energy, the average price
of gasoline in the United States has been steadily increasing
since 1999. In March of 1999, gasoline was $1.05 per gallon, in
2005 gasoline was $2.50 per gallon, and in 2011, gasoline
is now over $3.60 a gallon. In 2005 Patricia Schaefer took a
deeper look at how businesses were effected by higher gas
prices. Patricia stated that while both consumers and businesses
are affected by the higher gas prices, the small business owners are
usually hit the hardest.[1]




Analysis
(Three Parts)

Part 1: Personal Analysis

  • Small Businesses have a lot to think about when they external image market%20analysis.jpg
are trying to maintain a profit. Every Business wants to
make a profit. Your profit is equal to your Total Revenue
minus your Total Cost. The increasing gas prices are making it very hard for Businesses to make a profit. This variable cost, gas prices, is causing some Businesses to shut down. When a Businesses's economic loss is below their average variable cost, it is past the "shut down point" and the Business needs to quit. Most Businesses make changes to the way they are functioning so they do not reach the "shut down point".
  • After researching we came to the conclusion that the rising gas prices are really affecting Small Businesses. Business owners have had to make a lot of changes to stay afloat






Part 2: Interviews
(Interviews will show you real life examples of Gas Prices affecting those working in Small Businesses)


Steve Ricker
Convenience Store Owner
(Croften, MD)
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  • For the last fifteen years, Steve Ricker has owned and operated a branded gas station with a convenience and deli business.His business is located in a small shopping center surrounded by residential homes with small commercial businesses. Steve says that the rising gas prices affects all aspects of his business operation. "There is great competition in selling gasoline. Since I am a branded station, I have to compete with unbranded gas stations like "Wa-Wa" and "Sheets". The unbranded stations can afford to sell their gas at a lower rate whereas I cannot." Steve also says that as prices escalate, customers shop for the cheaper gas which causes him to lose sales. He also says that the rising gas prices affect his convenience and deli sales. "Three out of four gas customers also comes into the store to purchase other items. Fewer gas customers equals fewer inside sales. Everything from the cost of utilities, to cost of goods, and to services is hampered."
                    • Interview by: JP Ricker



Maria
Manager of Royal Pizza
(Long Island, NY)
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Royal Pizza is located in the suburbs of Long Island New York.
Since delivering on bikes would take forever, the delivery men use their cars. You would think that the rise in gas prices would only affect the drivers, but it affects the entire business. When the gas prices went up, the price of their cheese, flour, boxes and soda all went up. All Royal's distributors started charging them more for delivery because of the rise in gas prices. Maria said, "I know a lot of small business people in the food industry and they're hurting; business is slow, profits are down, and they're barely staying afloat." [1]
                    • Interview by: Patricia Schaefer



Don Waters
Co-Owner of Citrus Vally Florist
(Covina, CA)
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  • Citrus Valley Florist has been in business for 30 years.
Co-Owner Dan Waters said that not until 2003 did they even have
a delivery fee. Due to the increase in gas prices, in 2004 Dan said their delivery fees were reaching $10.00. Dan hates adding this fee, but he must do it to cover costs. Dan tries not to always pass this charge onto the customers,
which causes him to loose money. Dan was stated saying, "I'm a
customer and I get tired of always have to pay more because things
are out of control. We may not make as much profit but our customers are much happier." Dan takes a bigger hit then he needs to because he feels the customers will leave if his prices keep increasing. [1]


                    • Interview by: Patricia Schaefer








Part 3: Tips
(Tips to help Small Businesses save money)


What Should Businesses Do?

  • Tips from Rhonda Abrams (USA TODAY)

  • Rhonda Abrams pointed out that its not just companies that
    make deliveries, or use a lot of gas. All small businesses are
    taking a hit because of the high gas prices. [3]
  • Driving Less
    • Instead of doing random deliveries a small business can cluster deliveries and group locations together instead of back tracking to the same areas on different days. The very most affective way using public transportation or walk to your deliveries if it is possible.[3]
  • Going digital
    • The internet is a fantastic tool for an alternate of lowering the use of high gas prices. Products, catalogs, letters etc why send in the mail, when the internet is cheap and even better is immediate. Business meetings you can hold online web conferences and have everyone in the same room without even leaving your business or house.[3]

  • Change Working Hours
    • Quite simple, sitting in rush hour to make deliveries or go to work is a waste of fuel. Changing your business hours so when driving to and from work are not during rush hour can save you gas and more importantly money.[3]

  • Company Kitchen
    • Sitting in lunch traffic is a use of extra fuel. By having a company kitchen you allow the business to eat without even driving the car. You save money by saving your gas.[3]



{For more insight from Rhonda, Follow her on her Twitter page}



Critical Thinking
(Answers are on a Discussion Page)

1. Why does going digital in your business help save you money?

2. Do you think Small Businesses are taking a big hit from the rising gas prices?

3. According to the U.S. Department of Energy, how long have Gas Prices been rising?



external image mpgomaticgasmileagecalculator_20070718172329.jpg Want to know if a new vehicle will save you money?
Want to calculate your gas mileage? There's no faster way than the MPG-o-Matic Gas Mileage Calculator! The MPG-o-Matic Gas Mileage calculator lets you quickly and easily compare two sets of gas mileage figures. [4]








Rise in Prices
  • external image Profit-chart-iStock_000005745636XSmall1.jpgBelow is a Link that takes you to GasBuddy.com.
This page allows you to see the change in gas
prices from the last month, to the last 6 years.
You can see the average of the entire USA,
separate states in the USA, or all of Canada









Polls on increasing Gas Prices







Sources
[1] business know-how
[2] Gas Pic
[3] USA TODAY
[4] Gas Calc
[5] Gas Chart
[6] $ Chart Pic
[7] Royal Pic
[8] Florist Pic
[9] Analysis Pic