Small Business

Low fuel prices help boost Main Street’s bottom line

Falling fuel prices boost Main Street
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Falling fuel prices boost Main Street

As gasoline prices hover around the $2 a gallon, Main Street businesses with exposure to energy costs are seeing big savings. Plus, mom-and-pop shops without direct exposure to fuel expenses are seeing consumers' fuel savings translate to store sales.

The national average for regular gasoline was $2.07 a gallon, down 36.9 percent from an average of $3.28 a year ago, according to AAA Fuel Gauge.

But fuel prices recently have been ticking higher after falling to the lowest levels since 2009. AAA expects gasoline prices to increase in February following refinery maintenance and decreased production.

For now, fuel prices overall remain cheap, and small businesses are seeing benefits.

In a Quester research report compiled for CNBC, more than three-quarters of the small- to medium-sized businesses surveyed said they've been positively impacted by declining fuel prices.

Quester surveyed 150 owners of small businesses five to 500 workers. The businesses bring in $100,000 to $4.9 million in annual revenues.

What are businesses doing with the fuel savings? About 20 percent of businesses say they're just saving the cash, 19 percent are investing in employees, another 19 percent said they're just operating business as usual. Thirteen percent say they are expanding.

And for some business owners, fuel savings have meant more sales.

Joseph Dutra says consumers are spending more at his Kimmie Candy Company in Reno, Nevada. "We've seen more consumers and young kids with a few more dollars in their pockets to spend on candy," Dutra said. "Our retail sales have increased because people have more money to make those discretionary purchases." Online sales during the past six months have climbed 15 percent, he said.

Joseph Dutra said sales are climbing at his Kimmie Candy Company in Reno, Nevada.
Source: CNBC

Lower fuel prices are lifting transportation-focused small businesses.

James Beito, founder of Insearch Corporation, a construction transportation company based in Tempe, Arizona, said he's recently seen thousands of dollars in fuel savings. His 40 trucks burn about 10,000 gallons of fuel per week.

James Beito of Insearch Corporation, a construction transportation firm in Tempe, Arizona, is seeing big fuel savings.
Source: CNBC

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Lower crude oil prices—now around $50 a barrel—also are having a ripple effect on prices of plastic, which are derived from oil and natural gas. In the next few months, says he's projecting a drop in prices for plastic packaging materials he needs for his candy products.

"We do a lot of things in plastic tubes and film, and I think we will see those prices fall," Dutra said. "As we look at everything we do, as the price of fuel stays lower, we will see our commodity prices in a lot of places drop. The food business is very affected by fuel."

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