On Energy and Small Business: Congress Must Consider Costs

by BusinessTrends Guest: Thomas M. Sullivan

Close to 32 million people took to the roadways for Memorial Day weekend. This start of the summer driving season was marked by sticker shock as vacationers experienced gas prices near or above $4.00 per gallon. The travel industry predicted that one percent fewer people drove their cars over the Memorial Day weekend this year due to the high price of gas.

What about small businesses that use their cars, vans, trucks, and trailers for business every day, not just for vacation? The cost of gas for them does not mean the difference between a barbeque at home or at the beach. It may mean their survival. A study published by my office last month puts facts and figures on the harsh reality facing small employers when it comes to gas prices and energy costs. The study may be found at: www.sba.gov/ADVO.

Small businesses in virtually every industry sector are squeezed more by high energy costs than are larger businesses. Fuel costs for small firms are nearly twelve times as much as they are for large firms on a per dollar of sales basis. And, trucking is not the only industry slammed by motor fuel prices. Messengers and courier services are also highly impacted by rising gas prices, as is the dairy industry.

According to a recent survey by the NFIB Research Foundation, these firms usually try and absorb energy price increases. Passing on the additional cost to customers is just not a realistic choice for most small employers. The reality of high gas prices is that we are handicapping the small business sector while at the same time relying on them to lift our struggling economy.

This is not the first time we have turned to small business for help. An examination of the early 1990’s and earlier in this decade reveals that the net job growth provided by small business hiring provided the growth necessary to pull us out of recessions. In order for small business to thrive, we should renew our focus here in Washington on removing unnecessary regulatory barriers, providing access to health care for small business employees, and keeping taxes low enough to stimulate entrepreneurial growth.

The gas station sticker shock of a holiday weekend should go far in raising public awareness for what many small businesses face every day of the week. And, after the summer driving season, when we start thinking about heating our homes and businesses for the winter, small business face rising energy costs that are far more alarming. Our research shows that small firms with fewer than 50 employees pay 35% more for electricity than their larger industry counterparts.

When Congress returns from its own Memorial Day break, I hope they consider the disproportionately high energy and transportation costs faced by American small business owners. We should not be making it harder for small businesses to work their magic on our economy once again. Cost must be a key consideration for how our country tackles its energy needs.

Thomas M. Sullivan is the Chief Counsel for Advocacy at the U.S. Small Business Administration (SBA)