For years, Atlantic Richfield Co. has been a thorn in the side of the nation's oil industry, at least at the gas pump.

Taking advantage of its access to low-cost Alaskan crude and offering customers a no-frills, cash-only, pump-it-yourself gas station concept, Arco has consistently undercut the prices of other gasoline sellers in the five Western states in which it does business.

In the process, the Los Angeles-based firm has racked up the No. 1 position among gasoline marketers on the West Coast, with a 19 percent share of gasoline sales, and in the huge California market, with an 18 percent share.

Now comes the Iraqi crisis, and Arco is at it again. While other oil companies have marked up prices a dime or two a gallon, drawing accusations of price-gouging and calls for restraint from President Bush, Arco has narrowed its profit margins and has been holding the line at a 4-cent-a-gallon increase it put into effect shortly after Iraq panicked oil markets by invading Kuwait Aug. 2.

The result? Arco's retail gas prices are between a nickel and 13 cents a gallon cheaper than its competitors', according to the company. Business is up 15 percent in the past three weeks, and about 100 of Arco's 1,700 stations run out of unleaded gasoline for a few hours each day because of the demand.

"Arco is usually the cheapest, only now they're cheaper by more," said Laura Leavitt, a Los Angeles waitress and graduate student, as she filled her tank at one of the firm's stations, where unleaded was $1.15 a gallon. Another customer, Tobe Sexton, who switched from Chevron to Arco, said: "I did make a point to come here because of the prices."

Analysts say the goodwill engendered by Arco's strategy could pay off for the company in the long run, at a very small price in profits. But Arco's strategy is a break with the oil industry's gentlemen's rules, in which prices, while competitive, tend to move up and down at the same rate among all brands. And even Arco is claiming that its strategy is based more on patriotism than marketing savvy.

"What we're doing is responding to the president's request to hold the line on prices," said George Babikian, president of Arco Petroleum Products Co., the company's refining and marketing subsidiary. "Unfortunately, and I never thought I'd say this, unfortunately our volume continues to grow."

That's right, "unfortunately." The official line at Arco is that the added business brought by the lower prices is something of an inconvenience because it is causing occasional shortages that company officials believe do more harm than good. "When we run out of gasoline and have to close our service stations, that's a disaster for us, and I think it causes panic in the marketplace," Babikian said.

That attitude flies in the face of most mainstream retail theory, in which getting a price edge on a competitor can be a good way to build market share and goodwill that will pay off for a long time. But that's generally not the case in the oil industry, where the conventional wisdom is that customers show little brand loyalty and get upset when a convenient station is out of gas.

Still, Arco officials privately are happy with their low-price strategy and the good publicity it has brought the firm at a time when oil companies are roundly being bashed. "Public support for Arco has been enormous," said a company spokesman.

And an oil industry source said, "It appears Arco is forgoing short-term {profit} margin gains for long-term market share."

Despite its altruistic statements about obeying the president's call for restraint, Arco's pricing strategy is due in no small part to its unique supply situation. Unlike most oil firms, Arco is almost perfectly integrated -- its refineries use almost nothing but the company's own crude oil, meaning Arco doesn't have to buy expensive crude on the spot market to supplement its supply. And since Arco is a major producer of oil in Alaska, where crude is generally cheaper to pump and transport than elsewhere, its raw materials costs are relatively low.

That has allowed the company to pursue its longtime strategy of undercutting other gasoline sellers by a penny or two, crisis or no crisis, aided by its low-cost, no-frills service. Analysts say that is what has given Arco the No. 1 position on the West Coast.

The company's current strategy is just more of the same. When oil prices soared earlier this month, Arco's costs stayed pretty much the same -- although for accounting purposes it had to value its crude at the world price. And since Arco sells crude oil to other companies, it is making a tidy profit on oil sales that is helping to cover the low gasoline prices.

"They're making more money on the production end of the business, but they're making less on the refining and marketing end than they were before, if they're holding prices down to this extent," said Paul Mlotok, an oil analyst at Morgan Stanley & Co. in New York. "It would obviously be more difficult for somebody who was buying crude."

Indeed, other oil companies say they cannot match Arco's prices. "We could not commit to the kind of pricing window that Arco has because we're in a different pricing" situation, said a spokeswoman for Chevron Corp., the No. 2 seller of gasoline in California.

Arco officials say they will try to keep their prices down as long as they can, although they say they will not hesitate to raise them if they believe they are too far below the market or if the shortages worsen.

The company already has had to buy expensive gasoline on the spot market and lease additional tanker trucks to keep all its stations supplied, and it raised prices on jet fuel and diesel oil earlier this week to partly catch up with the competition.

"We're looking at this every single day," Babikian said. "We're trying to delay {an increase} as long as we can." Special correspondent Jill Walker in Los Angeles contributed to this report.