Small firms hit hardest by rising energy costs

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June 2008 — Vol. 86, No. 5

SMALL BUSINESS

Small firms hit hardest by rising energy costs

Manufacturing and commercial sectors top the list

Where to get help with high energy costs

Small firms are hardest hit by rising energy costs, according to a study released in April by the Office of Advocacy of the U.S. Small Business Administration. The small manufacturing sector tops the list of burdened industries on the basis of energy cost per value of industry shipments, while small commercial sectors top the list on the basis of energy cost per sales.

For 10 of the 17 manufacturing sectors for which data were available, small firms spent considerably more than large firms did for energy, on a per value of industry shipments basis. For food manufacturers, leather and allied products manufacturers, and computer and electronic products manufacturers, the costs per dollar of output were more than double those of their larger counterparts.

The study also finds that in 26 of 31 commercial industries studied, small firms have higher energy expenditures on a cost per dollar of sales basis. The median commercial sector industry has a small-entity energy cost per sales ratio that is 2.7 times the ratio for large entities.

Click here for the full “Characterization and Analysis of Small Business Energy Costs” report.