Rising Gas Prices Threaten Business Growth, Consumer Spending
The U.S. economy is showing signs of growth, but rising gas prices are taxing budgets and putting that hard-won growth in jeopardy. For small businesses, rising fuel costs make it difficult to plan for the future and make decisions on growth. For consumers, higher gasoline prices mean less expendable income for spending on products and services.
In a piece that asks businesses to think about how to remain profitable as gas prices rise going into the summer driving season, Huffington Post cited a recent Gallup poll that asked at what price the cost of gasoline significantly impacts Americans’ lifestyles and spending. Respondents, on average, said a price-per-gallon of $5.30 to $5.35 is the threshold at which prices begin to make a significant impact on their spending for other goods. Nearly 30% said gas prices between $4 and $4.99 would force them to make cutbacks in spending; another 31% indicated the same if prices were to reach between $5 and $5.99.
With that knowledge, Huffington Post's Rieva Leonsonsky urges businesses to think about customer behavior with regard to rising gas prices, and to consider how they can remain profitable. High fuel prices also challenge businesses whose work requires gasoline, such as trucking or construction. The rising costs can upset business plans, leaving companies with less capital for hiring and reinvestment in the business.
The national average for gas prices is around $3.90 a gallon, but some areas are already experiencing prices in excess of $4 a gallon. Further, some reports speculate gasoline could top $5 a gallon by the summer, leaving businesses only a short time to develop a strategy for encouraging sales despite high fuel costs. The Huffington Post offers some suggestions for how businesses can retain sales, including greater discounts, delivery services, and e-commerce options (which allow customers to purchase products without driving to the business’ physical location).
Learn more about how businesses can brace against rising fuel costs in the full story.