$3 a gallon? Gas costs fuel dismay

It's sad but true. Three-dollar gas prices have arrived in Boston's western suburbs.

While the barrier so far has only been broken by premium gas, some worry it may be a harbinger of prices to come for those who buy regular unleaded.

''I wouldn't be surprised if regular self-serve gas goes up to $3 in the next few months," said C.J. Spencer, an attendant at the Wellesley Hills Exxon. ''It's crazy. Prices are nuts."

The station earlier this week was charging $2.69 for a gallon of self-service regular unleaded and $2.89 for premium.

But those who wanted full service could expect to pay $2.89 for regular. And for premium? A hefty $3.09.

The most recent survey of state gas prices conducted by AAA this week found that Massachusetts drivers are paying more for a gallon of gas than ever before. Self-service regular unleaded gas is averaging $2.61 per gallon. That's an increase of seven cents from last week and 80 cents from January. It's also 71 cents more than the $1.90 average price a year ago at this time.

''This is the highest we've ever paid in gasoline," said Arthur Kinsman, government affairs director at AAA Southern New England. ''Every week we've seen a new record. Last week we saw a 15-cent increase, which was the highest one-week increase ever."

Gas stations in Needham Heights, Waltham, and Marlborough have reported charging $3 or more for premium unleaded, according to AAA. Regular unleaded gas on the islands of Martha's Vineyard and Nantucket has already topped $3 per gallon, stations said this week. AAA said it was unaware so far of any $3 regular unleaded prices on the mainland.

Joanna McCoy, 27, of Cambridge, saw the $3.09 full-service premium price at the Wellesley station when she came in for some gas for her landscaping company truck.

''It's over $3 here, so that's ridiculous," she said. ''Eventually, we're going to have to change the way we drive."

If history repeats itself, the surge in prices should level off after Labor Day, which signals the close of summer driving. But considering the record-breaking pace, that might not end up being the case this year, Kinsman said.

The rising costs, he said, appear to reflect oil traders' unease about overseas events, including unrest in the Middle East, hurricane season and its effects on oil shipments from Venezuela, and the recent death of Saudi Arabia's King Fahd.

The price of oil surged to record levels immediately following the king's death earlier this month. Oil prices have increased to $67 a barrel, more than 40 percent higher than at the beginning of the year, despite indications that world oil reserves currently appear healthy.

''I think what really is driving this is that there is excessive worry and speculation about unforeseeable events," Kinsman said.

Prices at selected gas stations in Boston's western suburbs checked by Globe West's PumpWatch were essentially flat compared with a week ago.

When adjusted for inflation, the prices are still 50 cents shy of the peaks reached during the early 1980s, but station operators said that hasn't stopped drivers from getting sticker shock.

Spencer said one out of three customers complains. Many people, he said, pull in -- then pull away after seeing the prices. Others, he said, are learning to use the self-serve pumps.

McCoy, who was just buying regular unleaded, grimaced and rolled her eyes when she got the bill at the Wellesley station. She hadn't even filled up completely, but it was costing her.

''Seventy-five dollars? Ugh," she said.

Gas station owners are pleading with customers not to blame them. They argue they have no control over prices set by the market and are just trying to survive.

''I'm at the mercy of our suppliers," said Steve Generoso, owner of Totten Pond Shell in Waltham, where regular unleaded costs $2.69 and premium unleaded is $2.99. ''It's a no-win situation for us, because people think we're gouging, and we're just trying to stay with the curve."

Station operators in Marlborough, Bellingham, and Milford said they were losing money. The cost of gas from suppliers is so high, they say, that they've lowered their profit margins to stay competitive, making it increasingly difficult to cover their operating costs.

The high gas prices could have a negative effect on the economy, some analysts say. If prices do not level off after Labor Day, as hoped, and continue to inch higher, Kinsman said, more people will likely start to rethink their driving patterns.

''People might actually start driving less," he said. ''It's obviously a society based around driving, so you can't stop driving, but you could be wise about how to use the fuel."

Franco Ordonez can be reached at fordonez@globe.com.