Vegas gas retailing giant promoting alternative fuels

David Strow

Thursday, Feb. 22, 2001 | 11:10 a.m.

As operator of the Arco chain, BP Amoco is best known in Nevada as one of the largest operators of gas stations in the Las Vegas Valley.

But Robert Malone, president of BP Amoco's Western operations, says the international energy conglomerate also wants to be known for another business -- alternative fuels.

It might seem a strange stance for a company to promote a competing product. But Malone notes that skyrocketing fuel prices have yet to control soaring demand for gasoline around the world.

"The world has got to go to alternative fuels," Malone said in a meeting with the Las Vegas Sun's editorial board Wednesday. "Why not go toward more environmentally friendly fuels? We believe that's the way the world is going. Demand for oil is huge. Conservation and alternative fuels are where we need to go."

BP Amoco acquired the Arco franchise as part of its buyout of Atlantic Richfield Co. last year. Though it operates under the BP name in the East, Malone said there are no plans to replace the Arco name in Las Vegas -- and that consumers should look for the brand to continue expanding in the area.

"It's a good solid business for us," Malone said. "The biggest marketing tool we have is the brand on the street corner."

There are 70 Arco stations in Nevada, 45 of which are in the Las Vegas area.

Though the company is one of the world's largest suppliers of gasoline and other petroleum products, it also is a manufacturer of solar power and wind power equipment. Malone said his company is examining ways to bring that to the Nevada market, either by supplying solar and wind power equipment to companies or by building its own alternative power facilities here.

"We're in very preliminary discussions, just starting," Malone said. "There's a real need for looking at alternative fuels."

Malone believes only alternative fuels will finally be able to control the high fuel prices seen across the country and in Las Vegas for the past year. Typically, price spikes have controlled demand for gasoline before, but that isn't happening this time, he said.

Recent reports, however, have suggested BP Amoco itself has been contributing to these spikes. The (Portland) Oregonian reported last month that two BP Amoco executives, in 1995, discussed "shorting the West Coast (petroleum) market" in order to achieve "West Coast price uplift scenarios."

Price increases for crude oil sent to West Coast refineries began to occur in 1996, some economists concluded in a Federal Trade Commission report, when BP Amoco began shipping Alaskan oil it had been sending to the West Coast to Asia. Previously, companies were prohibited from exporting Alaskan oil -- and BP Amoco drills one-half of the oil produced in that state.

Two consultants concluded in an FTC report that shift drove up oil prices by several cents a gallon on the West Coast, the Oregonian said. Despite the report, the FTC voted to approve the merger.

Malone responded that the ban on exports had created an "artificially depressed" oil market on the West Coast. Once Alaska opened, prices came up to reflect global oil prices, he said.

"No one producer can control the global market," Malone said. "(And) nobody can make that connection to retail (price increases)."

Today, Malone noted, the company is being forced to buy more oil than it produces to meet demand, further reducing its ability to control prices.

High demand in Las Vegas for gasoline nearly became a crisis earlier this year, when California's electricity crisis forced the shutdown of the city's only gasoline pipeline between the refineries of California and the city of Las Vegas. Gasoline shortages were feared, but never materialized after the pipeline situation was resolved.

But so long as demand remains strong, Malone feels oil companies will figure out ways to keep the market supplied.

"If the market is there, and you're willing to pay the price, someone will step in," Malone said.

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