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The rise and rise of gas prices has been well documented in recent months, as much as a result of the fact that they show absolutely no sign of coming back down again any time soon as the rise itself. However, high gas prices are not only affecting the common man that can barely afford the $3.30 a gallon that some gas stations are charging but also business owners. In effect, high gas prices are essentially ripping the heart out of the American economy and here is why.

Gas Budgeting

As the price of gas has risen so steeply in the past few months, it has become more difficult for companies to budget for their gas allowance. For example, business owners of haulage firms have had to cut back on their delivery runs as a result of the rocketing fuel costs, with some having to offer their services to local businesses for local runs rather than going on the more profitable long distance drives. This has not only cost them in terms of the business opportunities in the short term but also their ability to attract long term lucrative contracts with major companies.

With gas budgeting in place, some of those business owners have had to assess what jobs they could take on and which ones they could not, thus casting doubts over their long term survival.

Transportation

The availability of transportation for goods and services of the average business has also decreased, thus making it much harder for the average business owner to expand and thrive. With more transportation companies only being willing to stay in the local area, cutting back on the amount of trucks they operate and thus cutting its employment budget and the jobs that go with it.

Even companies that have their own transportation are feeling the pinch. They are having to fill up the tank of their trucks or vans three or four times a week at $70 to $80 every time. At a total of around $250 to $300 a week, very few businesses can continue to transport their own goods and services.

Service Charges

One business in San Diego has had to increase its service charges by approximately 5%. This business owner’s decision is typical of what is going on all over the country, but it is this that is endangering other businesses in a variety of industries because they cannot afford to pay the costs. It resembles a vicious circle for business owners in that respect because one business has had to increase the costs so a second business cannot afford to pay them so the first business is losing jobs and fighting for its life, whilst the second business is in the exact same position because it is unable to provide for its customers.

All of the above adds up to a major problem for the American economy. Slowly but surely, more businesses will begin to fail and that would lead to higher unemployment and fewer service providers. The latter would lead to higher prices on its own. As such, the high gas prices will undoubtedly have a negative impact on business owners into the future.