by Joe Shea
American Reporter Editor-in-Chief
August 6, 2001
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 the general press and with no coverage in trade journals like Oil News or the 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 conditions, with a higher octane rating indicating a higher quality of gas.
Without notice, then, oil companies have suddenly reduced the quality of their 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 change after returning from Las Vegas, where gas was $1.54, he said, and the octane 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 drivers preparing for summer vacations said oil prices -- then 20 cents per gallon higher than in 2000 -- were due to higher margins earned by refiners and retailers in the highly consolidated industry rather than foreign crude oil price increases, but oil industry spokesmen called the charge "ridiculous."
Speaking for the Washington-based American Petroleum Institute, the trade 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 online trade journal, Alexander's Oil & Gas Connections.
Joe Shea is Editor-in-Chief of the American Reporter. Reach him at joes= email@example.com.