<?xml version="1.0"?>
<ownershipDocument>
    <schemaVersion>X0201</schemaVersion>

    <documentType>4</documentType>
<periodOfReport>2003-12-30</periodOfReport>
<notSubjectToSection16>0</notSubjectToSection16>
    <issuer>
        <issuerCik>0000893813</issuerCik>
        <issuerName>PENN OCTANE CORP</issuerName>
        <issuerTradingSymbol>POCC</issuerTradingSymbol>
</issuer>
<reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001022881</rptOwnerCik>
            <rptOwnerName>RICHTER JEROME B</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>77-530 ENFIELD LANE, BLDG. D</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>PALM DESERT</rptOwnerCity>
            <rptOwnerState>CA</rptOwnerState>
            <rptOwnerZipCode>92211</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
            <reportingOwnerRelationship>
<isDirector>1</isDirector>
<isOfficer>1</isOfficer>
<isTenPercentOwner>1</isTenPercentOwner>
<isOther>0</isOther>
<officerTitle>CEO</officerTitle>
<otherText></otherText>
</reportingOwnerRelationship>
</reportingOwner>
<nonDerivativeTable>
<nonDerivativeTransaction>
<securityTitle>
<value>Common Stock</value>
</securityTitle>
<transactionDate>
<value>2003-12-30</value>
</transactionDate>
<deemedExecutionDate>
</deemedExecutionDate>
<transactionCoding>
<transactionFormType>5</transactionFormType>
<transactionCode>G</transactionCode>
<equitySwapInvolved>0</equitySwapInvolved>
</transactionCoding>
<transactionTimeliness>
<value>E</value>
</transactionTimeliness>
<transactionAmounts>
<transactionShares>
<value>10000</value>
</transactionShares>
<transactionPricePerShare>
<value>0</value>
</transactionPricePerShare>
<transactionAcquiredDisposedCode>
<value>D</value>
</transactionAcquiredDisposedCode>
</transactionAmounts>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>3903750</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value>
</directOrIndirectOwnership>
<natureOfOwnership>
<value></value>
</natureOfOwnership>
</ownershipNature>
</nonDerivativeTransaction>
<nonDerivativeTransaction>
<securityTitle>
<value>Common Stock</value>
</securityTitle>
<transactionDate>
<value>2003-12-30</value>
</transactionDate>
<deemedExecutionDate>
</deemedExecutionDate>
<transactionCoding>
<transactionFormType>5</transactionFormType>
<transactionCode>G</transactionCode>
<equitySwapInvolved>0</equitySwapInvolved>
</transactionCoding>
<transactionTimeliness>
<value>E</value>
</transactionTimeliness>
<transactionAmounts>
<transactionShares>
<value>15000</value>
</transactionShares>
<transactionPricePerShare>
<value>0</value>
</transactionPricePerShare>
<transactionAcquiredDisposedCode>
<value>D</value>
</transactionAcquiredDisposedCode>
</transactionAmounts>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>3888750</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value>
</directOrIndirectOwnership>
<natureOfOwnership>
<value></value>
</natureOfOwnership>
</ownershipNature>
</nonDerivativeTransaction>
<nonDerivativeHolding>
<securityTitle>
<value>Common Stock</value>
</securityTitle>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>37870</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>I</value>
</directOrIndirectOwnership>
<natureOfOwnership>
<value>Spouse</value>
</natureOfOwnership>
</ownershipNature>
</nonDerivativeHolding>
</nonDerivativeTable>
<derivativeTable>
<derivativeHolding>
<securityTitle>
<value>Purchase Warrants</value>
</securityTitle>
<conversionOrExercisePrice>
<value>2.50</value>
</conversionOrExercisePrice>
<exerciseDate>
<value>1999-07-31</value>
</exerciseDate>
<expirationDate>
<value>2004-07-31</value>
</expirationDate>
<underlyingSecurity>
<underlyingSecurityTitle>
<value>Common Stock</value>
</underlyingSecurityTitle>
<underlyingSecurityShares>
<value>30000</value>
</underlyingSecurityShares>
</underlyingSecurity>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>30000</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value>
</directOrIndirectOwnership>
<natureOfOwnership>
<value></value>
</natureOfOwnership>
</ownershipNature>
</derivativeHolding>
<derivativeHolding>
<securityTitle>
<value>Purchase Warrants</value>
</securityTitle>
<conversionOrExercisePrice>
<value>4.60</value>
</conversionOrExercisePrice>
<exerciseDate>
<value>2003-01-01</value>
</exerciseDate>
<expirationDate>
<value>2004-12-31</value>
</expirationDate>
<underlyingSecurity>
<underlyingSecurityTitle>
<value>Common Stock</value>
</underlyingSecurityTitle>
<underlyingSecurityShares>
<value>500000</value>
</underlyingSecurityShares>
</underlyingSecurity>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>500000</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value>
</directOrIndirectOwnership>
<natureOfOwnership>
<value></value>
</natureOfOwnership>
</ownershipNature>
</derivativeHolding>
<derivativeHolding>
<securityTitle>
<value>Purchase Warrants</value>
</securityTitle>
<conversionOrExercisePrice>
<value>6.9375</value>
</conversionOrExercisePrice>
<exerciseDate>
<value>2000-07-31</value>
</exerciseDate>
<expirationDate>
<value>2005-07-31</value>
</expirationDate>
<underlyingSecurity>
<underlyingSecurityTitle>
<value>Common Stock</value>
</underlyingSecurityTitle>
<underlyingSecurityShares>
<value>10000</value>
</underlyingSecurityShares>
</underlyingSecurity>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>10000</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value>
</directOrIndirectOwnership>
<natureOfOwnership>
<value></value>
</natureOfOwnership>
</ownershipNature>
</derivativeHolding>
</derivativeTable>
<remarks>Table I &amp; II:  Warrant Holdings were previously reported in error on Table I.  Now reported in table II.</remarks>
<ownerSignature>
<signatureName>Jerome B. Richter</signatureName>
<signatureDate>2004-01-22</signatureDate>
</ownerSignature>
</ownershipDocument>

