Small businesses say high fuel costs from war in Middle East ‘pretty hard to swallow’

CITYnews halifax / By Tara Deschamps, The Canadian Press

When Frame Aviation’s latest fuel shipment arrived, it came with a warning: the next one might have a significantly higher price tag.

The possible hike facing the aviation parts and fuel supplier about 130 kilometres south of Calgary in Claresholm, Alta., could add between 20 and 30 cents to every litre of gas the company procures for clients like the local airport and flying schools.

“If fuel prices get too high, people will stop flying or at least cut back on their flying … so my fuel sales will go down some percentage,” said co-owner Murray Frame.

“The price of aviation gasoline was around $2 a litre, but it could get as high as $2.30 a litre or $2.50 a litre. That’s pretty hard to swallow.”

Frame Aviation and many other small businesses are facing these price increases due to the war in the Middle East, which has blocked the flow of ships through the Strait of Hormuz.

About one-fifth of the world’s oil supply — 20 million barrels per day — travels through the waterway between Iran and the Arabian Peninsula on its way to the open seas and then to global customers.

With fuel not passing through the strait, crude has now soared to its highest price in years and its derivatives — jet fuel, diesel and gasoline — have also shot up significantly.

The increases have been hard to handle for all businesses but especially small ones. They don’t have the massive cash reserves or customer networks their larger counterparts often do and are still recovering from the COVID-19 pandemic and coping with the tariff war.

“A strong wind could blow down some of these small businesses these days because they are so, so weak, so any increase in their costs makes more of them vulnerable to going out of business,” said Dan Kelly, president of the Canadian Federation of Independent Business.

When the CFIB began surveying its 103,000 members about a week into the Middle Eastern conflict, it found 80 per cent of the roughly 1,200 respondents so far are worried that the war will have repercussions for them. (The association is still accepting responses, so those results are not final.)

That was no surprise to Kelly, who said everyone from manufacturers to truckers need fuel to operate.

“Even the local pizza restaurant is affected very much by energy costs,” he said.

Rising fuel costs have made it both more expensive for Icy Mountain Water Co. to ship out products including water, ice and firewood and receive supplies like bottles.

“Because shipping prices are so high, I find that once I give quotes to my customers online, I lose about half of the sales,” said Brandy Wilde, who handles administrative duties for the Medicine Hat, Alta., family business.

To keep costs down, she often prices out 20 different shippers who could bring bottles in from Calgary, Edmonton and Regina.

“I have to go with the lowest quote because I just don’t have the margins to be paying these high, high prices,” she said.

For the time being, two-thirds of CFIB members have said they are eating the rising cost of fuel, rather than passing it along to customers.

One-third have chosen not to stomach the increases and hiked their prices instead.

“They do that reluctantly because they know that consumers are not swimming in cash either, but business owners are left, in many cases, with no choice,” Kelly said.

That’s certainly how Frame is feeling.

“My margins are so small, especially with the aviation gas thing, I have to pass the increase on (to customers),” he said. “And if my sales volume goes down, which I anticipate it will, that’s just the way it is.”

He and his wife, who he co-owns the business with, are in their 70s and would prefer to retire, but no one wants to buy them out, so they’re keeping the company going with aviation fuel sales and small jobs.

If fuel costs continue to mount and make it more expensive for him to buy products or even heat his hangar, he said they would contemplate shutting down.

“If we start, losing money or I’m spending too many hours just spinning my wheels and not making any money, why would I bother?” he said.

While the war is too recent to have sparked shutdowns, it’s not unthinkable that some businesses could eventually close over higher fuel rates.

Already between 10 and 15 per cent of the companies the CFIB surveyed have had to reduce hours for staff or workers themselves to deal with the rising cost of energy.

“That isn’t all as a result of this conflict. We’ve seen energy prices rise over the last little while, so this has been a challenge for business owners, quite apart from the Iran conflict, but this has just made it way, way worse and super unpredictable,” CFIB’s Kelly said.

“We have no idea how long this conflict is going to go on and so business owners right now, for the most part are just bracing themselves, trying to make it through to the other side.”

This report by The Canadian Press was first published March 16, 2026.

Tara Deschamps, The Canadian Press