Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the amount of stock of the Company beneficially owned as of March 15, 2007 by each person known by the Company to own beneficially more than 5% of the outstanding shares of Penn Octane’s outstanding common stock (“Common Stock”).

(1)     Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock which are purchasable under warrants which are currently exercisable, or which will become exercisable no later than 60 days after March 15, 2007, are deemed outstanding for computing the percentage of the person holding such warrants but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.

(2)     Includes 37,850 shares of Common Stock owned by Mr. Richter’s spouse and 250,000 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(3)     Mr. Galloway is a managing member and the majority equity holder of Galloway Capital Management, LLC, the general partner of Strategic Turnaround Equity Partners, LP (Cayman) (STEP).  Mr. Galloway disclaims beneficial ownership of the shares of Common Stock directly beneficially owned by STEP (except for (i) indirect interests therein by virtue of being a member of Galloway Capital Management LLC, and (ii) the indirect interests of Mr. Galloway by virtue of being a limited partner of STEP).  Mr. Herman is a managing member of Galloway Capital Management, LLC, the general partner of STEP.  Mr. Herman disclaims beneficial ownership of the shares of Common Stock directly beneficially owned by STEP (except for indirect interests of therein by virtue of being a member of Galloway Capital Management LLC).

(4)     Mr. Murphy, who was a director of the Company from November 2001 through October 2006, is the president of Paradigm Capital Corporation, a Texas corporation, which in turn, is the sole general partner of The Apogee Fund, L.P., a Delaware limited partnership.  All of the referenced stock is owned of record by The Apogee Fund, and beneficial ownership of such securities is attributable to Mr. Murphy and Paradigm Capital Corporation by reason of their shared voting and disposition power with respect The Apogee Fund assets.   Includes 115,000 shares of Common Stock issuable upon exercise of Common Stock purchase warrants granted to Mr. Murphy.   

(5)     Swank Group, LLC serves as the general partner of Swank Energy Income Advisors, L.P. (“Advisor”) and may direct the Advisor to direct the vote and disposition of the 1,237,261 shares of common stock of Penn Octane held by the Cushing Fund, L.P and/or Swank MLP Conveyance Fund, L.P (collectively “Swank Funds”).  The Advisor is the general partner of the Swank Funds.  The principal of Swank Group, LLC, Mr. Jerry V. Swank, may direct the vote and disposition of the 1,237,261 shares of common stock of Penn Octane held by the Swank Funds.

The following table sets forth the amount of Common Stock of the Company beneficially owned as of March 15, 2007 by each director of the Company, each Named Executive Officer, and all directors and Named Executive Officers as a group.  The address of each person is c/o Penn Octane Corporation, 77-530 Enfield Lane, Bldg. D, Palm Desert, California.

* Less than 1%

(1)     Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock which are purchasable under warrants which are currently exercisable, or which will become exercisable no later than 60 days after March 15, 2007, are deemed outstanding for computing the percentage of the person holding such warrants but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.

(2)     Includes 30,000 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(3)     Includes 125,000 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(4)     Includes 125,000 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(5)     Includes 93,250 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(6)     Includes 37,500 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(7)     Includes 30,000 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.

(8)     Includes 440,750 shares of Common Stock issuable upon exercise of Common Stock purchase warrants.