Service-Station Slugfest

When Atlantic Richfield Co. decided a year ago to eliminate credit cards and cut its gasoline prices by 30 per gal., competitors snickered. After all, 25% of drivers buy gasoline on credit. But when Arco's volume started zooming upward, the competition quickly retaliated. Exxon and Amoco, two of the nation's largest marketers, announced a discount-for-cash policy. And Shell counterattacked by accepting credit cards from Arco holders and converting them into Shell customers.

Gasoline price wars are often fought over a profitable intersection and sometimes engulf an entire city. Never before, however, has...

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