More than 102 million Americans hit the road during the recent holiday season, and low gas prices were surely a welcome relief that helped make road trips more affordable.
Gas prices hit a yearly peak of about $3-per-gallon back in May but continued to fall through the end of the year, hitting $2.36 on New Year’s Eve.
Drivers are the most obvious beneficiaries of these low gas prices, but many people tend to forget the broader impact rates have on our economy and notably the small businesses that are responsible for much of the country’s economic advancement.
The economy works like a well-oiled engine with many moving gears and cogs that function in symphony. And the fuel that powers our cars, semis, planes and other transportation systems is the oil that keeps the engine running smoothly. In some ways, the price of fuel influences the economy just as much as variables like interest rates or the performance of financial markets.
As a small business owner, I understand firsthand the effects of fuel prices. Due to the company’s savings from low gas prices, I was able to give one of my team members a bonus.
America’s middle class is benefiting from the low gas prices. Last month, it was reported that in some areas of the country, people are saving $6 on a 15-gallon fill-up. These savings quickly add up. Over the course of a year, that’s an extra $312 in savings for the driver who fills up once a week—and $624 for those who fill up twice a week.
For business owners, slight fluctuations significantly impact the price of transportation. Price hikes can make it more difficult to meet budget goals, while price troughs can do just the opposite, spurring business investment and other benefits—including higher wages and employee bonuses.
I’m not alone in this thought.
During the months of near-record high gas prices back in 2012, C. Cookie Driscoll, a trustee of the National Small Business Administration, made clear the severe consequences of high fuel prices.
She testified on how rising gas prices negatively impacted the operations of a small farm she owned in Pennsylvania. She stated that high fuel prices had increased the costs of running farm equipment and transportation vehicles that were necessary to deliver products and pick-up horse feed. Driscoll went on to note similar problems plague all businesses.
So the question is, how do we keep fuel prices low and the economy ticking? The answer is energy independence. The U.S. needs to kick the habit of relying on foreign oil by encouraging domestic production. Luckily President Trump understands the importance of this goal and continues to take steps in that direction.
For example, as part of the Tax Cuts and Jobs Act — legislation signed into law by President Trump at the tail end of 2017 — parts of the Arctic National Wildlife Refuge were opened up to oil exploration. The area, according to the U.S. Geological Survey, is capable of producing one million barrels of oil per day — or 20 percent of all domestic oil production. When tapped, that could mean significant savings for even the smallest of businesses.
America depends on reasonably priced fuel to keep the economic engine running smoothly and efficiently. Continuing to move towards energy independence by encouraging domestic oil production will make that goal more attainable.
That way businesses will experience savings and, who knows, maybe your next road trip will be even cheaper.
Joseph Semprevivo is the president and CEO of Joseph’s Lite Cookies. He is an adjunct professor of finance, real estate and insurance at Indian River State College and author of “Madness, Miracles, Millions.”
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.