Shortly after the U.S.-led war in Iran began in late February, Ondrey Lawson noticed the surge in gas prices.
Mr. Lawson, who owns Phrostbite Italian Ice with his wife, Mia, went to fill up the heavy duty pickup truck that they use to haul their sweet frozen treats around Houston.
The cost stopped him cold.
A tank of regular unleaded gas usually ran him $70. The total this time was $90.
“Within a couple of days, things already started to skyrocket and get out of control,” he said.
The Lawsons serve Italian ice at festivals, weddings, birthday parties and other events. They soon found themselves altering their schedule and redrawing delivery routes to save money on fuel. In some cases, they tried to offset the rising cost of gas by scooping their own cups of saddle-up strawberry and wrangler watermelon, instead of paying employees to serve customers.
But as soaring gas prices continued to sap Phrostbite’s profits, the Lawsons realized they would need to take a more drastic approach: They had to raise prices.
“He and I both fought tooth and nail — we wanted to absorb as many costs as we could,” Ms. Lawson said. “Finally, I had to give in.”
Their decision shows how elevated energy costs, if they persist, could bleed into more than just higher prices at the pump for consumers in the coming months.
Oil prices are now around $100 per barrel for the international crude benchmark. While that is down from their recent peak of nearly $120 a barrel,, prices remain significantly elevated from before the war, ratcheting up the price of gas, diesel and heating oil. The average price of gasoline in the United States reached $3.98 a gallon on Wednesday, according to data from AAA, up more than 30 percent since the war began.
Rising energy prices have pushed up costs for American businesses, big and small, though it is an open question when, and even whether, they will pass on the extra burden to customers. Airlines are raising ticket prices to compensate for the ballooning cost of jet fuel, with Scott Kirby, the chief executive of United Airlines, warning on Tuesday that the carrier could increase prices by 20 percent if oil prices remain elevated.
Economists anticipate that the spike in oil prices will push up inflation at least marginally, and not just at the pump. Goldman Sachs estimates that every $10 increase in oil prices lifts “core” inflation, which strips out volatile food and energy costs, by 0.04 percentage points. As of January, the core Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation index, was 3.1 percent. That is far higher than the Fed’s 2 percent target.
It’s also possible that higher gas prices could lead consumers to pull back on other purchases as they reduce spending on discretionary goods and services. If that happens, businesses could be constrained in their ability to raise prices.
“There are just lots of ways that oil and derivatives of oil get into the production and transportation of many, many things,” Jerome H. Powell, the Fed chair, said at a news conference last week after the Fed held interest rates steady. “They’re big effects in headline inflation, but things like that leak into core as well.”
“You just don’t know how big this will be, and how long it lasts,” he added.
Unlike large corporations that are better capitalized to weather price shocks, smaller companies are more vulnerable. As a result, their customers could feel the ripple effects from the war-driven energy price spikes more acutely.
“Larger businesses just have more levers to pull and more flexibility to keep from raising prices,” said Justin Weidner, U.S. economist at Deutsche Bank. “Whereas smaller companies may not have that flexibility and so would almost have to pass through those increased energy prices to stay afloat.”
The spike in oil prices has come at a particularly unfortunate moment for small businesses. Many of them have already been stretched by President Trump’s tariffs, along with years of high inflation. A survey from the Small Business Majority, an advocacy group, found 64 percent of the roughly 250 businesses it polled said expenses had risen in the past three months.
The Lawsons started Phrosbite in 2021 after Mr. Lawson first tasted Italian ice during the depths of the pandemic. It hit the spot.
After having a baby last year, the couple focused less on the business. But 2026 was supposed to be a revival of sorts. The Lawsons were ready to ramp back up, with plans to expand. They had survived Mr. Trump’s tariffs that had lifted the cost of materials including cups and spoons, with relatively small price adjustments to their menu. They were considering opening a brick and mortar store and franchising.
“We really want to grow,” Ms. Lawson said.
While their long-term plans remain intact, they have been forced to confront the reality of yet another unknown in the economy outside their control. They have been calculating their profit margins under different scenarios, using the period after Russia invaded Ukraine in 2022, when the global price of oil reached about $125 a barrel, as a reference point.
“We’ll look at some sociopolitical data to kind of extrapolate what we think a high price will be,” Mr. Lawson said.
The Lawsons plan to increase the price of their starter catering package to $150, from $100. They are also thinking about raising the cost of a small cup to $8.50, from $8.
More than anything, they are trying to build in enough of a cushion with this price increase that they won’t have to raise prices again this year no matter what happens in the global economy.
“We try to just operate as efficiently as possible,” Mr. Lawson said. “One thing we don’t want to do is keep raising our prices for customers.”
Sydney Ember covers the U.S. economy for The Times.
The post The Oil Price Shock Could Make Italian Ice More Expensive appeared first on New York Times.
