Originally Posted by PNA

Ethanol has a higher octane rating than gasoline and refiners are required to meet certain national renewable fuel standards which effectively is requiring they blend as much ethanol in gasoline as legally possible. Most all (over 90% of all US gasoline) has ethanol in it and a very high percentage of it will contain ethanol at or near the highest legal blend (10% by volume) in order to meet this standard. 15% is now legal but it likely won't be hiting th market until the summer and likely in very localized areas. It is only legal in 2001 and newere cars.

The long and short of it is, I'm not sure how the station owner determined it would only have 3.5% but my guess is he doesn't know what he's talking about. A 10% volume blend is 3.5% percent oxygen by weight, so I think he is confused about what he told you. Also, right now, ethanol is cheaper than gasoline -- and therefore it is cheap octane -- so I would expect it would be a 10% blend.