$4 barrier broken

Service station owner Pallani Velloo has a degree in psychology, so he pondered the psychological impact of breaking through the $4-per-gallon barrier for gas.

"Nobody wanted to break the $4 barrier," he said Monday, "but all are inching up."

Over the weekend, he gave the go-ahead to his manager after paying a record price for the latest tanker delivery of gasoline to his station.

The result: $4.03 for a gallon of regular.

"I said, 'Break it. Let's break it,' " Velloo said of the $4 mark. "I can't help it. I'm starting to lose."

On Monday, Velloo apparently had the most expensive gasoline in Lake County, where mountain roads lead to higher hauling costs in areas such as Middletown.

"It's always more expensive here than anywhere else," said Emily Slavens, who was putting gas into her SUV at Velloo's Store 24. "It seems they always gouge people when they're out in the country -- because they can," she said.

The closest stations -- in Hidden Valley and Lower Lake -- were charging $3.99 for regular Monday, but they too are likely to soon push through the $4-per-gallon mark.

"It probably will be later this week," said Linda Claas, the station manager at the Shell station in Lower Lake.

Velloo said that he and other nearby station owners wind up paying about 20 cents more per gallon to have gasoline delivered from Bay Area refineries over the roller-coasterlike Highway 29 winding over Mount St. Helena.

In Santa Rosa on Monday, a gallon of regular was averaging $3.85, but at least one station, the Shell on Dutton Avenue, was charging $3.99.

In other parts of the state, the San Francisco area was averaging the highest, at $3.98, according to AAA. But some stations there began charging more than $4 earlier this month.

Nationally, the average was $3.50 for a gallon of regular Monday.

On Monday, few drivers seemed to be filling up their tanks in Middletown, and some indicated the record cost of gasoline is changing their lifestyles.

"I'm just going to get 3 gallons," said Gigi Beckham, who pulled up in her Hyundai after noticing the gas gauge was past empty. "This is more like an emergency stop."

Beckham, a Middletown schoolteacher, said her husband commutes to Agilent in Santa Rosa, and he'll fill the tank there, because it's cheaper.

She said the high cost of gasoline had led them to eat out less and even change their entertainment habits, such as ordering movies on DVD through the mail.

Other motorists said they are driving less often and dread the likelihood that gas will keep going up.

"If it gets up over $5 a gallon, I will park my truck and ride my . . . horse," said Bill Kritikos, a heavy-equipment operator who lives in Hidden Valley.

At current prices, he said, "you have to limit driving. You have to budget a lot better -- sacrifice."

Jay De Simone, an electrician who lives in nearby Harbin Springs, said he has been coming to the Chevron in Middletown for 30 years, out of habit. "If there were four gas stations -- one on each corner -- I might shop. It would be more competitive," he said.

His passenger, Michelle Allen, an in-home caregiver, said the high gas prices are making it difficult for her to make ends meet and take care of her clients. She said she's planning to move to the Sierras, where the cost of living is lower.

Cornelius Murphy, the owner of Blue Room Cafe in Harbin Springs, was putting mid-grade, $4.24-per-gallon gas into his pickup, because "the engine behaves better."

Murphy, who makes an annual trip to Europe, where gasoline prices have historically been much higher, said his overseas trips have made it a little easier to adjust to the higher price.

But he's noticed gas costs seem to be having a ripple effect on the delivery charges on some of the goods he buys for his cafe.

"I'll probably have to raise prices," he said. "We're getting caught in quite a squeeze."

Few people seem to be blaming that squeeze on the service station operators like Velloo, even though he hears the grumbling.

Service station owners, he said, "get 90 percent of the complaints and 2 percent of the profits."

"It's very hard to run a gasoline business now," said Velloo, who said most of his profit is made in his convenience store. "Gas stations that don't have minimarts are going out of business. It's a very fragile balance."

Velloo took a reporter into his office to show some of his ledgers that indicate what he pays for gasoline.

For his latest delivery, he was charged $3.48 per gallon. Then he adds another 32 cents per gallon in state and federal taxes, not including a separate state sales tax.

At a minimum, he said he wants to make 15 cents per gallon. But even so, he said a host of other costs eats into his bottom line, including inspection, jobber and licensing fees, not to mention what the credit card companies charge him for allowing customers to use their cards.

"If I close my business, I put 17 employees on the street," he said. "Unfortunately, I have to be the first to break the $4 barrier. If I don't, someone will."

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com