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.

Unleaded regular gas averaged about $3.70 per gallon last week in South Jersey, while premium blends fell just short of the $4 mark.

Last week, unleaded gas cost an average of $3.72 per gallon in the state ­– 4 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.

Local limousine companies have also seen a drop in business, said Sherry Brohl, who has operated Diamond Limousine in Margate for 15 years.

“People are cutting out limousines for airport runs, proms, weddings, because of the economy,” said Brohl. “We used to do a lot of Phillies and Eagles games. Now there’s not too much.”

Brohl has held off increasing her rates, even as some limo services are asking clients to pick up the tab for gas and tolls.

“I’m going to hang in there, keep hold of my regular customers,” she said. “So many people who are friends went out of business.”

Brothers Brian and Bill Conover started All Star Limousine in Somers Point last year. The majority of their business comes from 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.

South Jersey is hard hit because “the per capita income is less, and the distance between locations is more,” said state Sen. Jeff Van Drew, D 1st. “The high price of gas hurts businesses and hurts consumers – it also hurts our future and our security. If we had abundant supply we could compete; otherwise we’ll be borrowers and importers.”

Van Drew supports the development of multiple energy sources including coal and oil, wind and solar, along with nuclear power.

“I do believe in renewable energy, but anyone who tells you solar and wind can do it all is wrong,” he said. “We’ll be relying on fossil fuels for quite a while.”

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.

Meanwhile, Brohl is hoping to drum up more business this spring.

“If you need a limo, call me,” said Brohl. “I’ll take you to Wawa, wherever.”

Bill and Brian Conover, owners of All Star Limousine in Somers Point, said their next vehicle will be run on cost-efficient compressed natural gas.