A story in yesterday's Business and Finance section incorrectly stated that leaded gasoline costs more to produce than unleaded fuel.

Several Texaco gas stations, as well as a distributor and Texaco, Inc., itself have been fined a total of $159,000 by the federal government for fuel switching, selling leaded gasoline from pumps labeled "unleaded."

The action, taken by the Environmental Protection Agency against 11 stations in California as well as the larger firms, was called "the most serious instance of fuel switching ever prosecuted by the EPA," in a statement from EPA enforcement head Marvin Durning yesterday.

Although the EPA action was officially, taken because such fuel switching results in higher pollution and the eventual destruction of automobile catalytic converters designed to take only unleaded gasoline, EPA officials acknowledge that the likely motive for the switch was profits.

Unleaded fuel, although it costs less to produce than leaded, is priced considerably higher to consumers because of a complex set of federal pricing regulations. In some areas of the country, for example, gas stations are charging as much as 10 cents a gallon more for unleaded gasoline than for leaded.

The largest fines came against Texaco Inc. ($98,000) and Calleri Oil Company of San Leandro, Calif., ($52,000), a distributor to the 11 gas stations.

A spokesman for Texaco issued a statement saying, "We deny any wrongdoing on the part of the company." He pointed out that it is the responsibility of the distributor to handle retail deliveries and proper sales. The distributor in this case, the spokesman pointed out, picks up the gasoline in his own trucks. "After loading it belongs to the distributor," the spokesman added.

The violations were first discovered by the Alameda County Department of Weights and Measures in response to a citizen's complaint. That investigation resulted in a consumer fraud case against Calleri and some retailers in that county, seeking injunctive relief and civil penalties.

EPA studies have shown that as many as 10 percent of cars on the road requiring unleaded gasoline have been switching consciously to leaded gasoline for several reasons, including the lower cost and better performance because of the higher octane ratings of the leaded fuel.

"However," EPA's Durning said yesterday, "today's action is the first major case where motorists who were willing to pay the higher price of unleaded were actually being sold leaded."

He said the EPA was stepping up enforcement efforts in this area, because if feels that consumers and the agency both lose ground because of switching.

"In the long run," Durning said, "the money saved by fuel switching is exceeded by higher repair bills later on. Leaded gasoline shortens the life of spark plugs and exhaust systems.Further, the $200 investment in the catalytic converter is wasted."