The Postal Service is considering cuts at its Petaluma mail processing and distribution center, a prospect that has workers and local business leaders alarmed.

Some Petaluma operations could be shifted to a postal center in Oakland as part of a money-saving consolidation, the Postal Service said.

With U.S. mail service expected to lose $7 billion this year, "consolidating some postal operations only makes logical business sense given the economic realities," the agency said Wednesday.

The service is starting a review of the Petaluma facility, known as the North Bay Processing and Distribution Center, said James Wigdel, a spokesman for the Postal Service in San Francisco. "We'll know by the end of December if it makes sense to go forward," he said.

The regional postal center at 1150 N. McDowell Blvd. in east Petaluma has about 360 workers and handles mail for Sonoma, Marin, Mendocino and Lake counties.

Local mail service would suffer if Petaluma operations are moved to the East Bay, said Onita Pellegrini, CEO of Petaluma's Chamber of Commerce. "We're firmly opposed to them consolidating it with Oakland," she said.

Local bulk mailers would have to transport their materials to Oakland, she said. "It would affect our small businesses and nonprofits," Pellegrini said.

It's too soon to say which operations could be moved out of Petaluma, Wigdel said. As part of its study, the Postal Service will consider impacts on local service.

If the study recommends shifting some of Petaluma's operations, the Postal Service will hold a public meeting to receive input, it said.

Most workers at the Petaluma center are members of the Redwood Empire Area local of the American Postal Workers Union, said Valerie Schropp, the unit's president. They sort mail, run automated processing equipment, prepare mail each day for local carriers and do other jobs, she said.

Moving such operations to Oakland could delay local delivery, Schropp said. "If you mail a letter in Santa Rosa, it would have to go to Oakland to be canceled."

The union will attend study sessions and hold protests if the Postal Service decides to implement the plan, she said.

The Postal Service said U.S. mail volume has dropped by 35 billion pieces since the economic downturn began in 2007. The Petaluma processing center handles 3.7 million pieces of mail a day, compared with 8 million in 2005, Wigdel said.

"It's a pretty dramatic drop," he said.

The agency has more equipment, staff and facilities than it needs to process a declining volume of mail, it said Wednesday. "USPS has to realign its processing and delivery network to match its resources with its workload," it said.

The Postal Service cut spending by $3 billion this year and has reduced employment by 100,000 over the past three years, mostly through retirement and attrition. It's currently considering consolidation at 5 regional mail processing facilities in California, Wigdel said.

While mail volume has been hurt by e-mail and other alternatives, most of the decline is due to the recession, said Sally Davidow, spokeswoman for the postal workers union in Washington D.C.

"Mail is sensitive to the economy," she said. "A lot of it will come back."