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Gas prices could tank small transportation firms
Gasoline prices in New Jersey, now nearing a three-year high, are expected to climb even higher with the onset of spring and summer. While the pain at the pump is felt by everyone who drives, it could have a make-or-break impact on local taxi services – and, by extension, some of their customers, particularly older adults who no longer drive, and low-income residents who can’t afford a car.
Last week, unleaded gas cost an average of $3.72 per gallon in the state, four cents more than the previous week. Some analysts have predicted highs in the $4 to $5 range this summer. By contrast, last year at this time, the average price of regular gas was $3.40. And drivers may be feeling nostalgic for April 2010, when New Jersey motorists were paying an average of $2.63 per gallon.
The steady rise in fuel prices “is having a big effect” on business, said Tricia Wallack, owner of 5 Starr Taxi in Ocean City. Wallack serves many local customers on the island, in Somers Point, and in Upper Township, and also drives to the northern part of the state. She’s reluctant to pass the increase on to her customers for fear of losing regular business, but said she may have to consider it if the prices continue to spike.
“It’s brutal,” said Wallack, who is already sharing the cost of gas and tolls with her drivers. “For some of my customers who use a taxi to go back and forth to work, it’s hitting them as hard as having a car themselves.”
Wallack said some low-income residents opt for cabs to get to work, so they don’t have to arrange their lives around a bus schedule. If they’re priced out, “That single mom or single parent will have to get up an hour earlier to get to work, and come home an hour and a half later,” she said. “But as a business owner I don’t know how long I can stay at the regular rates. It’s hitting my pocket too.” While some taxi drivers are trying to stay local to conserve fuel, Wallack said the short “stop-start” runs burn more gas and are more expensive.
Joe Conforto, who founded Off-Shore Taxi in Rio Grande in 2004, faces the same quandary.
“Unfortunately like a lot of vendors and merchants, my customers cannot afford increases in fares,” Conforto said. “I’m very reluctant to raise prices, though in the summertime that might be a foregone conclusion.”
Conforto said he now pays $1,000 per month more for gas than he paid last September. “I’m dreading $4 per gallon or God forbid, $5,” said Conforti. “Then I’m looking at going from $35,000 a year in gasoline to $50,000. At that point I might really have to scale down the operation. I might have to get out of it.”
Local limousine companies also have seen a drop in business, said brothers Brian and Bill Conover, who started All Star Limousine in Somers Point last year, and primarily serve Pennsylvanians who own homes in Sea Isle City and Ocean City.
“We talk about it all the time,” said Bill Conover of gas prices. “To go back and forth to Atlantic City from Ocean City, getting four runs costs $65 for a tank. You end up with nothing. You break even. Unfortunately you have to pass it on to consumer, as much as we don’t like it.”
High gas prices have been blamed on a number of factors: instability in the Middle East, and locally, the closure of two oil refineries in Delaware County. Both Sunoco and ConocoPhillips said the refineries, which closed last year, were not profitable. A second Sunoco refinery in Philadelphia may close by July if the company cannot find a buyer, which could result in another spike at the gas station.
Escalating prices also have been blamed on a drop in demand due to the recession. But the last time demand dropped, in 2008, so did the prices, plummeting from $4 a gallon to about $2. Unfortunately for Americans, due to an explosion in the Chinese middle class, oil companies are shipping record amounts of refined petroleum products to Asia, and oil is also in demand in Europe. The oil companies don’t have to reduce prices here when they’re flush overseas. There may be no immediate relief in sight, even in an election year.
Al Borelli, a driver and dispatcher for Yellow Cab in Wildwood, said fares are set by ordinance on the island, but off-island fares and long-distance runs will rise along with the cost of fuel.
“If they go to Atlantic City, to Philadelphia, to Villas or Cape May, on those jobs the prices are affected,” said Borelli. “It can cost $30 to go to Villas.”
Asked how they will cope with the problem long-term, the Conovers said they may convert their two vans to run on compressed gas, like jitneys, which cost the equivalent of $1.75 per gallon to run. “It’s clean, it’s economical, it’s sustainable,” said Bill Conover.
Conforti agreed. “A hybrid would be the way to go, in a few years, when there are enough used Toyota Priuses around.”