* European exports to U.S. rise as refinery announces
* Rising exports lift European fuel prices
* Weaker pound, euro vs dollar also contribute
By Ron Bousso
LONDON, Feb 27 European motorists, upset at high
fuel prices, may be surprised to know that a significant portion
of the continent's petrol is sold to the United States, where
gasoline retails at less than half the cost.
Surprise could turn to alarm on hearing that those
trans-Atlantic exports spiked sharply higher this month - just
as fuel prices in euros and pounds sterling approached record
Gasoline exports from European refineries - mainly in
Britain, Italy, Spain, France and the Netherlands - to the U.S.
east coast rose from 418,000 barrels-per-day (bpd) at the
beginning of January to 666,000 bpd at the start of February
after U.S. gasoline futures prices spiked.
That is around one quarter of the European Union and
Norway's total gasoline production in January Of 2.6 million
bpd.. The United States uses about 8.5 million
barrels a day of gasoline.
"The demand from the U.S. is supporting gasoline prices at
unseasonably high levels," said Harry Tchilinguirian, oil
analyst at BNP Paribas.
"With low starting (U.S.) stocks and heavy drawdowns
expected, imports will be increasingly critical in plugging the
hole to meet U.S. demand. Imports will need to rise
significantly from here in order to make up for a lack of
supplies," Bank of America Merrill Lynch said in a note this
With motorists switching to diesel, Europe has long been
over-supplied with gasoline and short of diesel while the United
States, especially its densely-populated eastern coast, is short
A series of refinery bankruptcies and closures on both sides
of the Atlantic over the past two years because of poor profits
has reduced the European refining industry's ability to meet
fluctuations in demand on both continents.
That means spikes in U.S. demand can cause jumps in European
prices, if larger-than-normal volumes are diverted to the United
Benchmark European wholesale gasoline prices are up nearly
13 percent since the start of the year to around $1,102 a tonne.
"Drivers have been caught between the pincers of a pound
weakened against the dollar and soaring wholesale prices,"
Britain's Automobile Association (AA) said. "This has broken the
back of many family budgets and destroyed a great chunk of
petrol demand," said its president Edmund King.
Adding to costs in a dollar-denominated oil market, the
pound has dropped about 6.5 percent against the dollar
since the start of the year and the euro is down 3.5
percent over the past month, bringing retail fuel prices to near
record highs in both currencies.
That has hit demand. British and French gasoline sales both
fell in January about 8 percent compared to a year earlier.
OIL COMPANIES, TRADERS UP SALES TO U.S.
Oil companies Total, Exxon Mobil, Royal
Dutch Shell, BP and Valero supply
gasoline to the New York region under term deals amounting to
20-30 cargoes a month, each carrying 30,000-40,000 tonnes,
regardless of U.S. market prices.
Those companies plus traders including Swiss Vitol and
Gunvor ship incremental volumes at times when relative market
values in Europe and the United States make it profitable for
Traders said 10-12 additional cargoes were shipped in recent
weeks to meet U.S. demand after U.S. Hess Corp announced
in January the closure the 70,000 barrel-per-day Port Reading,
New Jersey refinery.
U.S. fuel retail prices are much lower than in Europe
because they carry much less tax. U.S. east coast retail
gasoline lately is priced around 84 cents a litre or $2.10 per
litre in the UK and $2 a litre on average in the European Union.
Booming shale oil supply in the United States has cut its
crude import needs but the closure of six East Coast and
Caribbean refineries over the past three years has cut 1.2
million bpd of U.S. refining capacity on an 18 million bpd
Some 1.8 million bpd of European refining capacity, 15
percent, has been mothballed since 2009, according to Deutsche