PEMBINA, N.D. — Soaring fuel prices are proving to be a pain for most people in the country, but they may have helped save the jobs of hundreds of workers in North Dakota's oldest town.

The Motor Coach Industries plant is the biggest employer in Pembina — about a quarter of the residents in the town of 640 work there. Four years ago, it was struggling to stay open.

Now, as more people across the U.S. shun gas-guzzling vehicles for public transportation, bus ridership is up. Transit systems from Houston to New York City are mulling expansion to keep pace.

"The bus industry is healthy right now — it's in a good place," said Michael Melaniphy, a Motor Coach Industries Inc. vice president.

It's a turnaround from just a few years ago when bus sales were down and the company was laying off workers, making the future of the Pembina plant uncertain.

MCI will begin delivering the first of 102 hybrid diesel-electric buses this summer to Houston's transit system, under a contract worth about $80 million. In addition, 126 diesel-only buses are being shipped out to New York City's transit system in a deal worth $67 million.

Mike Ohmann owns a hardware store in Pembina, a town that got its start in 1797 as a fur-trading post and was known as the first white settlement in the Dakotas. Ohmann said his business has gone up and down with the fortunes of the bus plant.

Layoffs hurt the economy in the region, since many of the workers commute from within a 75-mile radius of town, Ohmann said.

"When there are layoffs, it means nobody is putting another nickel into their home," Ohmann said. "Losing that plant would be devastating."

Motor Coach Industries, based in Schaumburg, Ill., makes buses for public transportation and motor coaches that are used as luxury recreational vehicles.

MCI's main plant is in Winnipeg while the Pembina assembly plant is 60 miles away — just over the border in northeastern North Dakota to satisfy conditions of the federal Buy America Act, which requires buses involved in federal contracts be produced in the United States.

MCI blamed the terrorist attacks of Sept. 11, 2001, for hurting the tourism industry and putting the skids on bus sales. The state gave the company a $12 million package in 2003 that included federal job training money and low-interest loans to help keep the Pembina plant open.

The number of employees slid to 88 in January 2004, the lowest level since the company opened in the mid-1960s. MCI was turning out about a bus daily then. At its peak, MCI was making about eight buses a day, running three shifts a day, seven days a week.

The Pembina plant currently makes about three buses daily, with a work force of about 250 people, said Patricia Plodzeen, a company spokeswoman in Illinois. There are no plans to increase the work force beyond that, she said.

Plodzeen said the 45-foot long, 55-seat hybrid buses are being produced in Winnipeg with the final assembly in Pembina.

The hybrids run on either electric or diesel or a combination, depending on the speed of the bus, Melaniphy said.

The hybrid coaches use less fuel than standard diesel buses, create less pollution and run quieter; emissions are reduced by about 30 percent.

The Houston contract is MCI's first major contract for hybrid buses, Melaniphy said.

Fifty buses are slated for delivery to the transit system by the end of this year, and 52 more are due next year, said Andrew Skabowski, Houston Metro's senior director of bus maintenance.

Houston Metro has a fleet of 1,210 buses, including 238 hybrids with the addition of the new MCI buses, which will be used to carry "park and ride commuters" for up to 40 miles, Skabowski said.

The MCI hybrids cost about $730,000 each, or about $180,000 more than a similarly equipped diesel bus, Skabowski said.

"The fuel economy savings augments the cost differential," Skabowski said.

MCI delivered four prototype hybrid buses to the transit agency in New Jersey five years ago and those buses are still in use.

Toronto's transit system also has placed an order for a pair of the buses, Plodzeen said.

The New York City Transit Authority claims to operate the largest hybrid bus fleet in the world, with 548, though none are from MCI.