Rising Gasoline Price and its Effect on the US Economy

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Gas prices have been steadily rising for the past six years. According to the U.S. Department of Energy, the average retail price of gasoline in the United States in March, 1999 was $1.05 per gallon and has risen to $2.50 per gallon in August, 2005. Rising gasoline prices are having a negative impact on the economy. "Higher energy prices were responsible for a jump in American inflation. Consumer prices rose by 0.7% in January, leaving the 4% higher than a year earlier."1

Rising gasoline prices affect both individuals and businesses, but small businesses are being hit the hardest. Small businesses generally do not have a large financial reserve to cover rapidly increasing costs such as gasoline. Small businesses with delivery services have been the hardest hit segment. Gasoline costs are a major expense for business like florists, moving companies, and pizza delivery services. These businesses take a double hit due to the rising gasoline costs. Their delivery expense has risen and distributors are charging more for their products because their delivery costs are higher as well.

The moving industry has suffered a loss in profits even though they have added a fuel surcharge to their costs.