Small Business Coping With High Gas Prices

Rising Gas Prices and Small Business

 

 

 

 

Gas Alternatives

While rising gasoline prices are one fact of life for businesses, prices for other forms of energy–especially natural gas and its more unconventional relative, shale gas, are falling in North America. Many commentators are seeing this phenomenon as positive for all businesses, especially small businesses.

Why?

For many years, the U.S. had been traditionally viewed as an importer of natural gas, which is a source of energy widely used by manufacturers. Billions of dollars were spent over the last two decades building infrastructure to allow the U.S. to import liquefied natural gas (LNG) from other countries. As recently as 2007, shale gas production in the U.S. has been on the rise to where today, only five years later, the U.S. is said to have a 100-year supply of natural gas. This is a boon for U.S. manufacturing companies providing a huge competitive advantage against European manufacturers both large and small.

How can small business owners cope with rising energy costs as part of doing business? First, small business should recognize that high or rising energy costs are part of the natural cycle of commodity pricing where prices ebb and flow based on supply and demand. On the practical side, owners may want to replace their gasoline-powered vehicles with a new gasoline-electric hybrid car or truck, thereby saving themselves precious dollars; businesses in Latin America may be less impacted by rising gasoline prices as the great majority of cars and trucks there are of the flex-fuel type, which means they can run on either gasoline or locally produced ethanol.

Second, although scenario planning used to be the purview of large companies, small business can use this management tool to plan for responses to various situations including high energy costs. In other words, small business needs to have a plan in place for dealing with rising energy costs.

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