Independence Day: High Gas Prices Bad News for Small Businesses

Record Independence Day Travel Has Downside For Small Businesses

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The American Automobile Association (AAA) released its Independence Day travel forecast, projecting that “41 million Americans will journey 50 miles or more from home during the Independence Day holiday weekend, a 1.9% increase from the 40.3 million people who traveled last year and a nearly 14% increase compared to the Memorial Day holiday weekend.”

AAA says the increase in travel indicates a rising willingness of Americans to use their credit cards. But the news is bittersweet for many small business owners, because of the potential downside.

Gas prices remain pumped up and are showing no signs of going down.

AAA expects the majority of U.S. drivers to pay the highest gas prices for Independence Day since 2008. Gas prices usually decline in the weeks leading up to Independence Day, but it hasn’t happened this summer due to higher crude oil costs as fighting intensifies in Iraq.

AAA does not believe that high gas prices will have a significant impact on the number of people traveling, but because people will be watching their pockets it could result in some consumers cutting back on dining, shopping or other trip activities, which means less money for small businesses relying on these visitors.

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Skyrocketing gas prices will also likely become a problem for owners who need to pay for air carrier and ground transportation to move their products. The lower profit margins of small businesses, and an inability to pass along fuel surcharges to others, means they’re stuck with higher gas bills.

Remember, small businesses don’t have the same type of leverage to negotiate with delivery companies, unlike bigger companies which are confident in the knowledge that delivery companies wouldn’t want to lose their business by tacking on surcharges.

The additional costs could prevent some owners from bringing in new hires to help out during the holiday period and can be disastrous down the supply chain for small businesses that need to have multiple cars or trucks on the road. Grocery companies that need to move beef, chicken and other edibles for the holiday could be significantly impacted.