Weeks after Ithaca Dispatch threatened the city with a unilateral and illegal price increase to pay for gas, the Common Council acted.

"We try to respond to the needs of the community and the taxi industry is one of them," said council member Robin Korherr.

Starting immediately, for every dime prices rise above two dollars per gallon, the gas surcharge will rise by a nickel. That means, with prices at around 3.05 for regular, the surcharge will be 50 cents per ride. As prices go, so goes the surcharge, up or down.

"It's one of the biggest expenses after payroll, and if we can't control that, we're in a lot of trouble," said the Ithaca Dispatch owner, Jon Kadar.

But the controversy is far from over. Both the city and the cab company say that they'd like to see the entire ordinance revamped, to make the fare structure simpler. But one common councilor tells News 10, that the gas surcharge needed to be handled separately.

"Do the gas prices because these need to be addressed right now, one cab company has already gone out of business," alderwoman Maria Coles said.

The urgency of gas prices is so high because the last time council talked taxi fares was back in 2004, when gas prices were a dollar lower.

"The bottom line is we've been falling behind a little bit, I think we've been paying five and six thousand every month, Kadar said.

Now, the full test is ahead, when council addresses the whole ordinance, amid still-unproven allegations of price gouging.