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By Anne Noyes
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As gas prices stick to $3, drivers grow frustrated

By Anne Noyes/Correspondent

Sun Jun 10, 2007, 05:35 AM EDT

Cambridge -

These days, with gasoline prices hovering around $3 per gallon for regular unleaded fuel, Cambridge drivers are rarely cheerful when they visit the gas pumps.

“A lot of customers are complaining — especially people who have to buy gas everyday,” says Aziz Elhadi, manager of the Sunoco station at Mass. Ave. and Lansdowne St., near Central Square. “It’s another $10 extra a day for taxi drivers. And in a month, it adds up. $300 a month — that’s a bill payment.”

Taxi drivers and regular drivers alike are feeling the financial pinch at the pumps — and now many are looking for ways to reduce their gasoline expenses.

“A lot of [taxi] drivers aren’t driving around as much and picking up street work,” says George Fiorenza, a manager at Ambassador and Yellow Cab of Cambridge. “They’re waiting to get a call or waiting at the stand.”

Commuters are also driving less and relying more on public transportation.

“I fill up less frequently and I try to use the car less,” says Purnima Sahgal, a Cambridge resident.

Sahgal has been driving her son to his high school in Dedham for the past two years, but the dramatic increase in gasoline prices over the last year has forced her to consider other options.

“I could fill my tank for about $30 last year, now it costs $47,” she says. “I might have to look into my son taking the subway to school, even though it’s a long haul and it’s not so safe.”

Other drivers are turning to services like Zipcar, a service that has the cost of gasoline included in the hourly car rental fee, or GoLoco.org, a Web site that helps people set up carpooling arrangements.

“We’ve actually had a spike in applications over the last months,” says Dan Curtin, Zipcar’s Boston regional vice president. “We saw this previously when gas prices went up.”

But, Curtin adds, the higher gasoline prices, which drive up Zipcar’s operating costs, are a concern for the company.

“We look internally at how we can reduce our own costs and become more efficient as a way to battle those high gas prices,” he explains. “Right now it’s something that we can absorb. But we’ll probably have to rethink that policy if gas goes up to four dollars a gallon.”

The high gas prices are also taking a toll on some Cambridge businesses that consume large quantities of fuel.

For Academic Movers, higher gasoline costs have dramatically increased the company’s operating expenses. But because the moving industry is extremely competitive, the company can’t raise its prices.

“We are getting less money for the cost we incur in each move,” says Derek Waddington, the company’s general manager. “It could drive us out of business because raising prices is really out of the question.”

Instead, Waddington carefully selects the company’s moving jobs, in order to ensure that each one will be profitable.

“You think twice before you take on a job,” he admits. “If a job is too small, then you decide it may not be worth your while. That may affect some customers.”

Amid widespread frustration, many people are quick to blame the government, oil companies, or gas stations for the high gasoline prices. Not so fast, says Gary Taylor, a petroleum economist and principal at the Cambridge-based consulting firm, The Brattle Group.

“A lot of the problem seems to be that refining capacity is pretty short,” he notes. “So while there’s crude oil around, supplies of gasoline are low. Some of the refining capacity never recovered from [Hurricane] Katrina.”

But Taylor adds the problem also stems from the huge difference between wholesale gasoline prices and the prices consumers pay at the pumps. Normally, gas stations mark up wholesale prices by roughly $0.65 per gallon to recoup the cost of taxes and other expenses. But according to Taylor, the current mark-up at the pumps is more than $0.90 per gallon, on average.

“The difference between wholesale prices and what’s sold on the street has gone way up,” he says. “There’s better than twenty cents in there that is really not explained by refinery capacity. It’s being taken between the wholesaler or the gasoline retailer.”

But at gas stations in Cambridge, owners and managers insist they’re not to blame for the soaring gasoline prices. They say that, like their customers, they’re struggling with the burden of high gasoline prices.

“There is no profit margin, but right now that’s normal life,” says Tony Elemer, owner of the Shell station at Memorial Dr. and River St.

Al Elias, manager of the Mobil station at Broadway and Prospect St., says his profits are also suffering because customers are buying significantly less gasoline.

“A lot of people have been doing the ten dollar or fifteen dollar thing lately” — rather than filling up their tanks, he said. “We do less volume, so we make less profit. We’ve been trying to advertise for our repair services to compensate that way.”

Credit card fees that run between two and three percent per dollar of gas sold also take a significant bite out of gas stations’ profits. “That hurts us the most,” says Nate Lakkis, owner of Chico’s Sunoco on Concord Ave.

At the Sunoco on Mass. Ave. in Central Square — as seems to be the case at gas stations throughout the city, discontent simmers on both sides of the gas pump — among both retailers and consumers.

Elhadi gestures toward his customers pumping gas outside: “They will leave you for a penny,” he says wryly. “The higher your prices go, the less gallons you will sell.”

Outside, Cape Cod resident Creighton Peet is pumping gas into his car – and his outrage at the swiftly increasing numbers on the pump is barely concealed.

“Prices are obscene,” he exclaims. “I can’t understand why it’s not a huge national crisis – why people don’t seem to be fazed. Everybody just pays for it. It will be five dollars a gallon, and we’ll still be doing the same thing.”

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