Some contractors argue with their clients over design specifications or the size of the bill. But Anthony Rawls has an entirely different sticking point with his best customer—the route he takes to work.

With the price of gasoline at $4 a gallon, Rawls, the president San-Marin Construction in South San Francisco, is trying to save money. His work can take him as far as Ukiah, more than 100 miles north of San Francisco. For this job, he carefully maps out the routes needed to visit 26 bank branches in the most fuel-efficient manner.

But his client, a major bank he declined to identify, often has a different schedule in mind.    

For managers of businesses both big and small across the nation, the rising cost of fuel and energy is very much on their minds. It's not just airlines and trucking companies that are struggling with the recent sharp increases in energy prices. Businesses that use cars, vans, or trucks for distribution or services are feeling the pinch, as are manufacturers that use oil-based products from detergent to plastics. Gasoline prices are up nearly 28 percent from a year ago, and crude oil futures are up 85 percent from a year ago.

When oil prices began climbing several years ago, companies were able to absorb the hit, for the most part, as the costs of other goods fell thanks to global competition. Now, however, the prices of other commodities are also rising, adding to the pressure. 

The quandary is whether to pass along at least some of the higher costs in the form of price increases. That's easier done when the economy is booming. In a slowing economy, raising prices could drive away customers. Still, there comes a breaking point for a business to stay profitable. The recent surge in fuel prices may be it.

"It either cuts into their profit, or they pass that on to consumers," says Mark Pingle, a professor of economics at the University of Nevada in Reno. "The trouble is when prices go up, people will tend to buy less of their product."

Rob Adler and his colleagues at Birchwood Best, which produces hardwood and plywood in Birchwood, Wisconsin, for builders and cabinetmakers, have been postponing a decision on prices for months.

"We're looking at raising prices," says Adler, Birchwood's general manager. "We've always been proud of the fact that we've been able to control raw-material costs and manufacturer costs just by continuous improvement. But we may have no choice."

Birchwood has the responsibility of fueling the eight to 10 trucks that leave the main factory every day. The company also has to wrestle with more expensive oil-based resins that are used to make particleboard. The cost of resins has increased by 25 to 40 percent over the last six months, Adler says.

To cut their own costs, the company began designating regular "milk runs" between plants where raw materials are stored, ensuring each run carries the maximum load.