Soaring fuel and energy costs rank second only to the cost of healthcare among the problems facing small business owners, according to one of several surveys by the National Federation of Independent Business, California’s leading small business association. According to NFIB’s recently-released Small Business Problems and Priorities survey, 42.3 percent of the small business owners nationwide rank the cost of natural gas, propane, gasoline, diesel and fuel oil as a “critical” concern. That’s up from 26.1 percent on the previous survey, conducted in 2004. Both surveys rank the cost of health insurance as the number one issue facing small business owners.

Details of the most recent Small Business Problems and Priorities survey, sponsored by Wells Fargo, are available here [1]. For information on the 2004 survey, click here [2].

The National Federation of Independent Business represents small businesses in a wide range of industries that are being hurt by higher fuel prices. In addition to the Problems and Priorities survey, the NFIB Research Foundation has published two other national polls - Energy Consumption and Adjusting to Cost Increases -- which are available on NFIB’s small business information Web site, www.411sbfacts.com [3].

Key facts from NFIB’s Energy Consumption Poll:

• Small business energy costs (closely related to consumption) are primarily linked to vehicles (38 percent), heating and cooling of occupied space (33 percent), operating equipment or processes (21 percent) and lighting (6 percent).
• Of the 84 percent who use vehicles in their business operations, 49 percent did not change much of anything in the last year to counteract the higher price of gasoline and/or diesel. The most frequent step for those who did was: 18 percent rescheduled or changed routing; 16 percent used fewer vehicles or used them less frequently; and 11 percent purchased or leased more energy-efficient vehicles.

Key facts from NFIB’s Adjusting to Cost Increases Poll:

• Small business owners respond to cost increases with a variety of specific actions. The most frequently taken actions include absorbing the increased cost in the form of lower earnings or profits, higher selling prices, and reductions in the use of the good/service whose cost rose, e.g., energy conservation when energy costs rise. Employee-related measures, e.g., layoffs, or altered investment patterns are not taken often unless they are the good/service whose cost increases.
• Small business owners are likely to take more than one specific action to adjust for cost increases. Sixty-four (64) percent of small business owners adjusted to energy cost increases earlier in the year with multiple actions. Thirty-one (31) responded with a single action.

NFIB strongly supported the recent decision by Congress to suspend shipments to the Strategic Petroleum Reserve. This action will free up supplies to meet market demand without risking national security. NFIB worked with Sen. Norm Coleman (Minnesota) and Rep. Brad Ellsworth (Indiana) to convince the IRS in June to raise the standard mileage deduction for business travel eight cents to 58.5 cents, to reflect higher costs supports. We have also called on members of Congress to support increased offshore oil and natural gas exploration, and it supports a bill to reduce the federal tax on diesel fuel to the same level as the gasoline tax to help to ease the burden on small business owners who own and operate diesel equipment.

As millions of people – including small business owners -- hit the road this holiday weekend, we urge our policymakers in California and Washington D.C. to carefully consider the results of our recent surveys as they make decisions going forward.