Vol. 12, No. 3,009 - The American Reporter - October 19, 2006



Exclusive: OCTANE RATING SLIPS ALONG WITH GASOLINE PRICES
by Joe Shea
American Reporter Editor-in-Chief
Hollywood, Calif.

Printable version of this story

HOLLYWOOD -- If you live in Los Angeles, take a good look at the octane = rating for premium gas when you stop by to fill up your tank today.

At many stations here, including Arco and Mobil -- with nary a word to t= he general press and with no coverage in trade journals like Oil News or th= e Oil & Gas Journal -- the octane rating of premium gas has fallen from 92 = to 91.

Octane ratings indicate how well the gas burns under normal driving co= nditions, with a higher octane rating indicating a higher quality of gas. Without notice, then, oil companies have suddenly reduced the quality of th= eir best gas even as prices began to also fall. The lower octane rating is = posted on gas pumps, however.

At Joe's Mobil Station On Franklin Ave. at Argyle St., an attendant said= he could not recall when the octane rating was changed, but thought it was= "a while ago" and urged a driver to contact the owners.

Meanwhile, a driver at one of the pumps said he just noticed the chang= e after returning from Las Vegas, where gas was $1.54, he said, and the oct= ane rating was still 92. Another customer said he asked the same question = earlier in the day. "They told me not to ask so many questions," he said.

The octane rating had also dropped at an Arco station on Los Feliz Blvd.= in Atwater Village, a suburb of Los Angeles bordering Glendale.

Why competing companies should take the same step in one state and not= another is unknown, but suggestions of price-fixing are likely to occur as= investigators at the Federal Trade Commission study the issue.

In March, a report by the Consumer Federation of America aimed at driv= ers preparing for summer vacations said oil prices -- then 20 cents per gal= lon higher than in 2000 -- were due to higher margins earned by refiners an= d retailers in the highly consolidated industry rather than foreign crude o= il price increases, but oil industry spokesmen called the charge "ridiculou= s."

Speaking for the Washington-based American Petroleum Institute, the trad= e association that represents the U.S. petroleum industry, Rayola Dougher, = a senior API policy analyst said "It is just not right. The mergers are an = attempt by companies to realize economies of scale to cut back their costs,= and this reduction is passed along to consumers."

No company controls more than one-sixth of the total volume of gasoline= sold, she added. "When these mergers do occur inevitably something is sold= off, usually gas stations, to the independents," Ms. Dougher told an onlin= e trade journal, Alexander's Oil & Gas Connections.

Joe Shea is Editor-in-Chief of the American Reporter. Reach him at joes= hea@cal.net.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

Site Meter