CHEAP GAS PROMISED; ARCO BUYER PLEDGES GOOD DEAL IN STATE.

Byline: Scott Lindlaw Associated Press 

BP Amoco's chief executive pledged Thursday that gasoline prices at Arco stations will remain lower than competitors' in most California markets when Arco is taken over by the British petroleum giant.

Sir John Browne also said he would work to ensure that Atlantic Richfield Co. beats by one year a December 2002 state deadline to phase out MTBE, a fuel additive that cuts air pollution but taints groundwater.

And Browne said he would expand Arco's charitable giving in California from an average of $8 million a year to $10 million annually for the next decade.

BP Amoco announced April 1 that it was buying Arco, which has a strong presence in California. BP has very few gasoline stations in California, and Amoco has none.

If the sale receives regulatory approval, BP Amoco would continue to sell gasoline under the Arco brand name.

Browne was returning a visit to Gov. Gray Davis, who was in London last month and pressed Browne on a variety of issues. At the time, Browne was noncommittal on MTBE, but promised to maintain Arco's philanthropy.

A few days later, Browne sent Davis letters promising to increase charitable giving and to accelerate the phaseout of MTBE. Browne and Davis met in the Governor's Office this week to cement the agreements.

``These are performance commitments that we have to meet, so you will see us doing that,'' Browne said.

Davis said he would monitor the company's progress on all three fronts.

``I've lived long enough to know that people can talk a good game, and I'm into results. I'm into accountability, so I'll be watching closely to make sure that BP-Arco - assuming the merger is approved - honors its commitments,'' he said in his office, sitting next to Browne.

Russell Long, a spokesman for the San Francisco-based environmental group Blue Water Network, lauded Browne's announcement on MTBE.

``I think this is a very positive development because it will be extremely beneficial for protecting water supplies in California. We hope other petroleum companies will match BP Amoco's commitment,'' he said.

Browne acknowledged that he wasn't certain what the company would use to replace MTBE. Ethanol is the likely choice, he said.

Depending on the availability of ethanol, up to 20 percent of Arco gas sold in California already is MTBE-free, said Tom Markin, an Arco spokesman.

Arco is known for low prices at the pump.

``It is the low-ball gasoline pricer in the West Coast, almost invariably,'' said Trilby Lundberg, an oil industry analyst, based in Camarillo, who conducts a nationwide survey of 10,000 gas stations twice a month.

Browne told Davis that when Arco attempted to raise pump prices in the past, customers fled.

``It's a winning formula to be the price leader in California, and that's a formula that we want to adopt,'' Browne said.