Small Business, Feeling the Squeeze at the Pump

By April 9, 2008Energy

Looks to be a good hearing at 10 a.m. today at the House Committee on Small Business, “The Impact of Increasing Gas Prices on Small Businesses.” For many small businesses — manufacturers and services, both — transportation fuel represents a major fixed cost of operations, one that they can’t easily replace.

Gary Gilberti of Chesapeake Rehab Equipment in Pittsburgh describes typical conditions faced by numerous small-business operators. From his prepared testimony:

The service and delivery model of this business requires companies to make deliveries and service calls to the homes of customers. Many of the individuals we serve are unable to come to our locations and their equipment is not always conveniently transported.

Companies in this industry are primarily small privately owned businesses that serve a local or regional community. Most have annual revenues under $3M and many are rural providers who may serve an area with a radius of up to 200 miles. These companies employ fleets of their own vehicles which each can make 5-10 delivery/service stops and traveling 150-200 miles per day. The vehicles will cover rural and urban areas and experience highway and city driving conditions.

We can think of a lot of business with similar profiles, although the rehabilitative equipment industry faces another problem — government programs like Medicare and Medicaid pay the bills, but at a fixed rate, unlikely to rise in compensation for higher fuel prices.

Again, looks like an informative hearing, and we understand the committee will post video highlights tomorrow afternoon.

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