EXHIBIT 1
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           NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE
          HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
          AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE.
          NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE
          UPON EXERCISE HEREOF MAY BE SOLD OR OTHERWISE TRANSFERRED IN
          THE ABSENCE OF REGISTRATION OR QUALIFICATION OR AN EXEMPTION
                         THEREFROM UNDER APPLICABLE LAW.

                          COMMON STOCK PURCHASE WARRANT
                            Void after March 19, 2002

                                               Warrant to Purchase 30,303 Shares
                                                 of Common Stock, $.01 par value
                                                      of Penn Octane Corporation

                         PENN OCTANE CORPORATION (POCC)

This  is  to  Certify  That,  FOR  VALUE  RECEIVED,

                                   STEVE PAYNE

or  registered  assign(s)  (herein  referred  to as the "Holder") is entitled to
purchase,  subject  to  the  provisions  hereof, from PENN OCTANE CORPORATION, a
Delaware  corporation  (the "Company"), but not later than 5:00 p.m., California
time, on March 19, 2002 (or, if such date is not a Business Day in Redwood City,
California,  then  on  the  next  succeeding day which shall be a Business Day),
30,303  shares  of  Common  Stock,  $.01  par value, of the Company (the "Common
Stock")  at  an  exercise  price of $2.59 per share, subject to adjustment as to
number  of  shares  and  purchase  price  as  set forth in Section 6 below.  The
exercise  price of a share of Common Stock in effect at any time and as adjusted
from  time to time is hereinafter sometimes referred to as the "Exercise Price".
For  purposes  of this Warrant, a "Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York,
or  in  Redwood  City, California, are authorized by law or regulation to close.

The  shares of Common Stock issuable upon exercise of the Warrants are sometimes
herein  called  the  "Warrant  Stock."

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     1.     Exercise  of  Warrant.  This Warrant may be exercised in whole or in
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part  at  any time and from time to time by presentation and surrender hereof to
the  Company  at its principal office with the Purchase Form annexed hereto duly
executed  and  accompanied  by  payment  of  the  Exercise  Price in immediately
available  funds  for  the  number  of  shares  specified in such form.  If this
Warrant  is  exercised  in  part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the right
of the Holder to purchase the balance of the shares purchasable hereunder.  Upon
receipt  by  the Company of this Warrant at the office of the Company, in proper
form  for  exercise,  accompanied  by  payment of the Exercise Price, the Holder
shall  be  deemed  to  be  the  holder  of  record of the shares of Common Stock
issuable upon such exercise, notwithstanding that certificates representing such
shares  of Common Stock shall not then be actually delivered to the Holder.  The
issuance  of  certificates  for shares of Common Stock upon the exercise of this
Warrant  shall  be  made  without  charge  to the Holder for any issuance tax in
respect  thereof  (with  the  exception  of  any  federal  or state income taxes
applicable  thereto),  all  such  taxes  to  be  paid  by  the Company, it being
understood however that the Holder shall be required to pay any tax which may be
payable  in respect of any transfer involved in the issuance and delivery of any
certificate  in  a  name  other than that of the Holder.  The Company will at no
time  close  its  transfer  books  against  the  transfer of this Warrant or the
issuance  of  any  shares  of  Common  Stock  issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.

     2.     Reservation of Shares; Stock Fully Paid.  The Company agrees that at
            ---------------------------------------
all  times  there shall be authorized and reserved for issuance upon exercise of
this  Warrant such number of shares of its Common Stock as shall be required for
issuance  or  delivery  upon  exercise of this Warrant.  All shares which may be
issued  upon  exercise  hereof  will,  upon  issuance,  and  receipt  of payment
therefor,  be  duly  authorized,  validly issued, fully paid and non-assessable,
free  of  preemptive  rights  and  any  other  rights  of  others.

     3.     Fractional  Shares.  This  Warrant  shall not be exercisable in such
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manner  as  to  require  the  issuance of fractional shares.  If, as a result of
adjustment  in  the Exercise Price or the number of shares of Common Stock to be
received  upon exercise of this Warrant, fractional shares would be issuable, no
such  fractional shares shall be issued.  In lieu thereof, the Company shall pay
the  Holder  an  amount  in  cash  equal to such fraction multiplied by the Fair
Market  Value  of  a  share of Common Stock.  The term "Fair Market Value" shall
mean,  as  of  a  particular  date,  the  market  price  on  such  date.

          For purposes of this Warrant, the market price on any day shall be the
last  sale  price on such day on the NASDAQ-AMEX Stock Market, or, if the Common
Stock is not then listed or admitted to trading on the NASDAQ-AMEX Stock Market,
on  such  other  principal  stock exchange on which such stock is then listed or
admitted  to  trading,  or,  if  no  sale  takes  place  on such day on any such
exchange,  the  average  of  the  closing  bid  and  asked prices on such day as
officially  quoted  on  any  such  exchange, or, if the Common Stock is not then
listed or admitted to trading on any stock exchange, the average of the reported
closing  bid  and  asked  prices  on  such day in the over-the-counter market as
quoted  on  the  National  Association of Securities Dealers Automated Quotation
System  or,  if  not  so quoted, then as furnished by any member of the National
Association of Securities Dealers, Inc. selected by the Company.  If there shall
be  no  meaningful over-the-counter market, then Fair Market Value shall be such
amount, not less than book value, as may be determined by the Board of Directors
of  the  Company.

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     4.     Exchange  or  Assignment  of  Warrant.  This Warrant is exchangeable
            -------------------------------------
without  expense  (other  than  applicable  transfer taxes) at the option of the
Holder,  upon  presentation  and  surrender  hereof to the Company for any other
Warrants  of different denominations entitling the holder thereof to purchase in
the  aggregate  the same number of shares of Common Stock purchasable hereunder.
Subject  to  the  provisions of Section 11 below and any restriction on transfer
applicable  hereto  pursuant  to the securities laws of the United States or any
State,  upon  surrender  of  this Warrant to the Company with an assignment form
duly  executed, and funds sufficient to pay any transfer tax, the Company shall,
without  charge,  execute  and deliver a new Warrant in the name of the assignee
named  in  such  instrument  of  assignment,  and this Warrant shall promptly be
cancelled.  This  Warrant  may  be divided or combined with other Warrants which
carry  the  same  rights upon presentation hereof at the principal office of the
Company,  together  with a written notice specifying the names and denominations
in  which  new  Warrants are to be issued signed by the Holder hereof.  The term
"Warrant"  as  used  herein includes any Warrants into which this Warrant may be
divided  or  exchanged, and the term "Holder" as used herein includes any holder
of  any Warrant into which this Warrant may be divided or for which this Warrant
may  be  exchanged.

     5.     Rights  of  the  Holder.  The Holder shall not, by virtue hereof, be
            -----------------------
entitled  to  any  rights  of  a stockholder in the Company, either at law or in
equity,  and  the  rights  of  the Holder are limited to those expressed in this
Warrant.

     6.     Adjustment  of  Exercise Price and Number of Shares.  The number and
            ---------------------------------------------------
kind of securities purchasable upon the exercise or exchange of this Warrant and
the  Exercise  Price  shall  be subject to adjustment from time to time upon the
occurrence  of  certain  events,  as  follows:

     A.     Adjustment  for  Change  in Capital Stock.  If at any time after the
            -----------------------------------------
date  hereof,  the  Company:

          1.     pays  a dividend or makes a distribution on its Common Stock in
                 shares  of  its  Common  Stock;

          2.     subdivides  its  outstanding  shares  of  Common  Stock  into a
                 greater  number  of  shares;

          3.     combines  its outstanding shares of Common Stock into a smaller
                 number  of  shares;

          4.     makes  a  distribution  on  its  Common  Stock in shares of its
                 capital  stock  other  than  Common  Stock;  or

          5.     issues  by  reclassification  of its Common Stock any shares of
                 its  capital  stock;

                                        3
<PAGE>
then  the  Exercise  Price  in  effect  immediately prior to such action and the
number  of  shares  and type of capital stock issuable upon the exercise of this
Warrant  shall  be  adjusted  so  that  the Holder may receive, upon exercise or
exchange  of  this  Warrant  and  payment of the same aggregate consideration as
provided  herein and any proportionate part thereof upon any partial exercise of
this  Warrant,  the  number  of shares of capital stock of the Company which the
Holder  would  have  owned  immediately  following such action if the Holder had
exercised  or  exchanged  the Warrant immediately prior to the applicable record
date  or  effective  date  of  such  action.

     The adjustment shall become effective immediately after the record date for
the  determination  of  stockholders  entitled  to  receive  the  dividend  or
distribution  in  the case of a dividend or distribution and as of the effective
date  of  any  subdivision,  combination  or  reclassification.

     B.     Adjustment  for  Other Distributions.  If at any time after the date
            ------------------------------------
hereof,  the  Company  distributes to all holders of its Common Stock any of its
assets  or  its  debt  securities,  the Exercise Price following the record date
shall  be  adjusted  in  accordance  with  the  following  formula:

                    E'=  E  x  M-F
                               ---
                                M

where:  E'  =  the  adjusted  Exercise  Price.
        E   =  the  Exercise  Price  immediately  prior  to  the  adjustment.
        M   =  the current market price (as defined in (e) below) per share of
               Common Stock  on  the  record  date  of  the  distribution.
        F   =  the  aggregate fair market value (as conclusively determined by
               the Board  of Directors of the Company) on the record date of the
               assets or debt security to be distributed divided by the number
               of outstanding shares of Common Stock.

     The adjustment shall be made successively whenever any such distribution is
made  and  shall  become  effective  immediately  after  the record date for the
determination  of  shareholders  entitled  to  receive the distribution.  In the
event  that  such  distribution  is  not actually made, the Exercise Price shall
again  be  adjusted to the Exercise Price as determined without giving effect to
the  calculation  provided  hereby.  In  no  event  shall  the Exercise Price be
adjusted  to  an  amount  less  than  zero.

     This subsection does not apply to cash dividends or cash distributions paid
out  of  consolidated  current or retained earnings as shown on the books of the
Company  and  paid  in  the  ordinary  course  of  business.

     C.     When  No  Adjustment  Required.  No  adjustment  need  be made for a
            ------------------------------
change  in  the  par  value  of  the  Common  Stock.

                                        4
<PAGE>
     D.     Statement of Adjustments.  Whenever the Exercise Price and number of
            ------------------------
shares  of  Common  Stock  purchasable  hereunder  is required to be adjusted as
provided  herein, the Company shall promptly prepare a certificate signed by its
President  or  any  Vice  President  and  its  Treasurer or Assistant Treasurer,
setting  forth,  in  reasonable  detail, the event requiring the adjustment, the
amount  and nature of the adjustment of the adjustment, the method by which such
adjustment  was calculated (including a description hereunder), and the Exercise
Price  and  number  of  shares  of  Common Stock and/or description of the other
capital  stock  and  number  of  shares  of  the other capital stock purchasable
hereunder  after  giving  effect  to  such  adjustment, and shall promptly cause
copies  of  such  certificates  to  be  mailed  to  the  Holder.

     E.     No  Adjustment  Upon  Exercise of Warrants.  No adjustments shall be
            ------------------------------------------
made  under  any Section herein in connection with the issuance of Warrant Stock
upon  exercise  or  exchange  of  the  Warrants.

     F.     No  Adjustment  for  Small Amounts.  Anything herein to the contrary
            ----------------------------------
notwithstanding, no adjustment of the Exercise Price shall be made if the amount
of  such  adjustment  shall  be  less than $.05 per share, but in such case, any
adjustment  that  would  otherwise  be required then to be made shall be carried
forward  and  shall  be  made  at the time and together with the next subsequent
adjustment  which, together with any adjustment so carried forward, shall amount
to  $.05  per  share  or  more.

     G.     Common Stock Defined.  Whenever reference is made in Section 6(a) to
            --------------------
the  issue  of shares of Common Stock, the term "Common Stock" shall include any
equity securities of any class of the Company hereinafter authorized which shall
not  be  limited  to  a  fixed  sum or percentage in respect of the right of the
holders  thereof to participate in dividends or distributions of assets upon the
voluntary  or involuntary liquidation, dissolution or winding up of the Company.
Subject  to  the  provisions  of Section 7 hereof, however, shares issuable upon
exercise or exchange hereof shall include only shares of the class designated as
Common  Stock  of  the  Company  as of the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof or as a
result  of  any  corporate  reorganization  as provided for in Section 7 hereof.

     7.     Notice  to  Warrant  Holders.  So  long  as  this  Warrant  shall be
            ----------------------------
outstanding,  (i) if the Company shall pay any dividend or make any distribution
upon  its  Common  Stock,  or  (ii) if the Company shall offer to the holders of
Common  Stock  for  subscription  or  purchase  by  them  any shares of stock or
securities  of  any  class  or  any  other  rights,  or  (iii)  if  any  capital
reorganization  of  the  Company,  reclassification  of the capital stock of the
Company,  consolidation  or  merger  of  the  Company  with  or  into  another
corporation,  or any conveyance of all or substantially all of the assets of the
Company,  or  voluntary or involuntary dissolution or liquidation of the Company
shall  be effected, then, in any such case, the Company shall cause to be mailed
to  the  Holder, at least thirty (30) days prior to the date specified in (x) or
(y)  below,  as  the case may be, a notice containing a brief description of the
proposed  action  and  stating  the  date which shall be (x) the record date for
determining  the  stockholders of the Company entitled to receive such dividend,
distribution  or  rights,  or  (y)  such  reclassification,  reorganization,
consolidation,  merger,  conveyance, dissolution or liquidation is to take place
and  the date, if any is to be fixed, as of which the holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for securities
or  other  property  deliverable  upon  such  reclassification,  reorganization,
consolidation,  merger,  conveyance,  dissolution  or  liquidation.

                                        5
<PAGE>
     8.     Certain Obligations of the Company.  The Company agrees that it will
            ----------------------------------
not increase the par value of the shares of Warrant Stock issuable upon exercise
of  this  Warrant  above  the prevailing and currently applicable Exercise Price
hereunder,  and  that  before  taking  any action that would cause an adjustment
reducing  the  prevailing  and current applicable Exercise Price hereunder below
the  then  par  value of the Warrant Stock at the time issuable upon exercise of
this  Warrant, the Company will take such corporate action, as in the opinion of
its  counsel, may be necessary in order that the Company may validly issue fully
paid,  nonassessable  shares  of  such  Warrant  Stock upon the exercise of this
Warrant.  The  Company  will maintain an office or agency (which shall initially
be  the  Company's  principal  office  in  Redwood  City,  California)  where
presentations  and demands to or upon the Company in respect of this Warrant may
be  made  and  will give notice in writing to the registered holders of the then
outstanding  Warrants,  at their addresses as shown on the books of the Company,
of  each  change  of  location  thereof.

     9.     Repurchase  Right.  Notwithstanding  any  other  provisions  of this
            -----------------
Warrant, the Company may, in the event that, after the date six months after the
date hereof, the closing bid price, as reported on the NASDAQ/AMEX or such other
exchange  on  which  the  Company's  Common  Stock  may  then  be quoted, of the
Company's  Common  Stock is greater than $3.50 for ten consecutive trading days,
upon  not  less  than ten (10) days' notice in writing to the Holder, repurchase
all  or  any portion of this Warrant at a purchase price equal to $.10 per share
of  Common  Stock  covered  hereby,  such  purchase  price  to be proportionally
adjusted  each time the Exercise Price is adjusted pursuant to Section 6 hereof.
During  such  ten  (10)  day  period,  the  Holder  may exercise such Warrant in
accordance with the terms hereof.  The closing on such repurchase shall occur on
the  date  and at the time set forth in such notice at the office of the Company
in  Redwood City, California or at such other place as shall be specified by the
Company.  At  the  Closing,  the  Company  shall deliver to the Holder an amount
equal  to  the purchase price in immediately available funds and the Holder will
deliver  this  Warrant  to  the  Company  for  cancellation.  To  the extent any
repurchase  hereunder  is  of  less  than  all of the rights represented by this
Warrant,  the  Company  will  deliver  to  the Holder a new Warrant covering the
rights  not  so  purchased.

     10.     Determination  by  Board  of  Directors.  All determinations by the
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Board  of  Directors of the Company under the provisions of this Warrant will be
made  in  good  faith  with  due  regard  to  the  interest of the Holder and in
accordance  with  sound  financial  practices.

     11.     Notice.  All  notices  to  the  Holder shall be in writing, and all
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notices  and  certificates  given  to  the  Holder  shall  be sent registered or
certified  mail,  return  receipt  requested,  to  such  Holder  at  his address
appearing  on  the  records  of  the  Company.

     12.     Replacement of Lost, Stolen, Destroyed or Mutilated Warrants.  Upon
             ------------------------------------------------------------
receipt  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of  this Warrant and, in the case of any such loss,
theft  or  destruction,  upon  delivery of any indemnity bond in such reasonable
amount as the Company may determine and in the case of any such mutilation, upon
the surrender of such Warrant for cancellation, the Company at its expense, will
execute  and  deliver,  in  lieu  of  such  lost, stolen, destroyed or mutilated
Warrant,  a  new  Warrant  of  like  tenor.

                                        6
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     13.     Number  and  Gender.  Whenever  the singular number is used herein,
             -------------------
the  same  shall  include  the plural where appropriate, and words of any gender
shall  include  each  other  gender  where  appropriate.

     14.     Applicable  Law.  This  Warrant shall be governed by, and construed
             ---------------
in  accordance  with,  the  laws of the State of New York, without regard to its
conflict  of  law  principles.


                                   PENN  OCTANE  CORPORATION


                                   By: /S/ Jerome  B.  Richter
                                      ------------------------------------------
                                        Jerome  B.  Richter
                                        President  and  Chief  Executive Officer
Dated:  March  19,  1999

                                        7
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                                  PURCHASE FORM
                                  -------------


                                                      Dated  __________  ,  ____


          The  undersigned  hereby  irrevocably  elects  to  exercise the within
Warrant  to purchase ___________ shares of Common Stock and hereby makes payment
of  in  payment  of  the  exercise  price  thereof.



                                        Signature______________________________

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