After tariffs and inflation, small businesses face another problem: higher gas prices

By Samantha Delouya, CNN

(CNN) — John Andrews, a South Carolina-based chef who runs a meal delivery service, estimates he drives over 100 miles every week to deliver fresh home-cooked meals to his clients.

“The economy is killing me on food prices. And gas prices are tough now, too,” Andrews said. “It’s kind of a double whammy. I’m working just as hard as ever, but I’m losing ground here.”

After several years of higher operating costs and softer consumer demand, gas prices are climbing as the war with Iran escalates. That’s adding pressure on small businesses, which power the US economy and account for most of the country’s jobs.

The average US gas price hit about $3.25 a gallon on Thursday, according to AAA, up more than 36 cents from last month’s $2.89 average. Diesel, which powers big trucks that deliver the world’s goods, has risen even more: According to AAA, diesel prices are up about 11% from last week’s average, surging to $4.16 a gallon from $3.76 a week ago.

For companies that rely on driving and deliveries, like Andrews’, the conflict in the Middle East is already cutting into margins as gas prices climb.

Although Iran has long operated under sanctions, its oil continued flowing to buyers such as China. Disruptions to that supply are pushing global prices higher, and the impact is showing up at the pump.

Andrews, whose company offers two-portion pre-made meals, like lemon garlic chicken and pepper steak, for $17 each, said it’s only a matter of time before he raises prices, something he hasn’t had to do since inflation hit food prices hard two years ago.

“My clientele is more elderly than not, and I can’t just keep hitting them with price increase after price increase. They’re not going to accept that,” Andrews said. “But now I’m simply not making any money.”

‘Everything goes up’

Many small businesses were already under strain, even before the war with Iran started. In 2025, they were more likely to report declining revenues than rising ones compared with a year earlier, and expectations for revenue and hiring growth over the next 12 months have fallen to their lowest levels since 2020, according to a Federal Reserve small business report released this week.

In Burbank, California, Kim Williams, owner of the Enchanted Florist, carefully plans her flower delivery routes to save on gas. Over the past year, a few of her suppliers raised prices due to tariffs. On some occasions, she found lower-cost alternatives, but other times, she had to adjust the prices she charges.

“I think it’s just normal, everything goes up,” Williams said. “All of our costs have gotten greater, like insurance and workman’s comp.”

Her experience reflects a broader trend: The Fed’s study found that small businesses most often cited higher expenses for goods, services, and wages as their top financial challenge, with many passing those costs on to customers.

Nearby, Hollywood Bus Tours winds through Los Angeles’ famous movie lots and upscale neighborhoods, a must-do for many visitors. But founder Chris Leschinger has seen a slowdown. Fires in the area and a federal immigration crackdown last year have reduced tourism, leaving his 12 buses carrying fewer passengers.

“The bulk of people are from out of the country,” he said. “You sometimes get locals or staycationers, but most come from farther away.”

Gas is one of Leschinger’s largest costs. So far, he hasn’t raised ticket prices, choosing instead to absorb some of the expense.

“We’re worried not just about gas, but about the global politics that come with it,” he said. “Some people just don’t want to travel to the US. So the gas coupled with that is pretty scary.”

Ripple effects

Kareem Miller began operating his Chicago-based trucking business, Strong Pact Trucking, about three years ago. Today, he has three trucks that he estimates collectively drive about 1,200 miles per day.

His vehicles, like the overwhelming majority of large trucks, run on diesel fuel.

“I’ve seen diesel prices fluctuate, but never spike that quick. It was bad,” Miller said.

Miller estimates the recent jump in fuel prices has already added about $100 to his gas bill this week. His company mostly hauls construction materials, and if diesel keeps climbing, he says he’ll have little choice but to raise his transportation rates.

Many small businesses depend on trucking companies like his to move goods across the country. If those rates rise, the higher costs can ripple outward in the form of higher prices.

“How far is this going to go? Because that’s going to affect the whole economy,” Miller said. “The trucking industry is a microcosm of the economy.”

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