Gas stations across the area are struggling - not despite historically high gasoline prices but because of them.

Gas stations across the area are struggling - not despite historically high gasoline prices but because of them.

Owners said their profits have shrunk substantially, if they still have any. Most are instead relying on their ancillary businesses, such as car repairs and convenience stores, to stay open.

In what may be a sign of the times, Mendon lost all of its gasoline service last week. One station closed; the other changed ownership and closed down its full-service pumps while keeping its convenience store open.

"With the cost of gas, we can't afford the extra hand," said Banaras Khan, one of the station's new owners. He added, "Especially the small convenience store with gas is really, really struggling."

Exxon Mobil Corp. said last month it will leave the retail gas business over the next few years, selling more than 2,000 stations, reported the Associated Press. The company said the stations were hindering growth.

"Retailers are earning apparently very, very thin margins right now. I know consumers are frustrated and angry, and hurt by rising prices, but what they may not know is their local gas stations are not helped by rising prices either," said John H. Seesel, the Federal Trade Commission's associate general counsel for energy. "Rising oil prices don't automatically translate into big, fat profits for the gas station at the corner."

The main reason is credit card fees, explained Paul O'Connell, New England Service Station and Auto Repair Association executive director.

Stations typically charge customers between eight and 12 cents more per gallon at the pump than they pay at the wholesale level, while credit companies charge stations 2 percent of each purchase, he said. The higher the cost of gas, the higher the fee, eating into the profit.

Further compounding the problem is how much money it costs to refill a station, O'Connell said. He said owners now have to pay more than $45,000 for 12,000 gallons, prompting them to borrow more.

"It's a bad, bad environment right now for independent gas station owners because the cash-flow requirements are so immense," O'Connell said.

Several owners cited credit-card fees as an acute burden when gasoline costs more than $4 per gallon. In Massachusetts last week, the average cost of regular gasoline was $4.06 per gallon, AAA reported. That is the same as the past two weeks, but more than a dollar more expensive than this time last year.

"Almost all of my profits go to credit card fees and 93 percent of my sales are credit cards," said Gabi Aoude, owner of Natick Shell. "I do not make profit from gas anymore. We try to make up for it with our repair shop."

At Molloy's Service Center in Franklin, owner Nabil Nakhaui said he is trying to encourage more customers to use cash for the same reason.

"There really is no money in selling gas," he said. "Credit-card fees are between 2 and 4 percent, which is about 10 to 16 cents per gallon. We offer an eight-cent cash discount because of it." Nakhaui, too, is using revenue from car repairs to cover the cost of selling gas. "Demand is so low and there is no cash flow," he said.

And Jerry Lazzaro, owner of an Exxon station in Hopkinton, said he is "lucky to make any money off of gas because of the credit cards." He noted demand is dramatically down recently. "If I am able to squeak out a profit I am doing very well."

In Ashland, David Diprizio, a Mobil station owner, said his volume has actually increased about 8 percent, but profit margins have also fallen. His income mainly comes from his repair garage.

"I have to tighten up the reins around here - keeping payroll down and watching the heat and electricity use," he said.

While O'Connell expects wholesale gasoline prices will eventually fall and the current business climate will improve, he said the gas station market will likely be reshaped as well, with many more stations closing.

"The crisis will pass and the strong will survive," he said, "but you've got to have a good business plan."

MetroWest Daily News correspondents Jeff Ghiringhelli and Krista Perry contributed to this report. Aaron Wasserman may be reached at 508-634-7546 or awasserm@cnc.com.