* European exports to U.S. rise as refinery announcesclosure
* Rising exports lift European fuel prices
* Weaker pound, euro vs dollar also contribute
By Ron Bousso
LONDON, Feb 27 (Reuters) - European motorists, upset at highfuel prices, may be surprised to know that a significant portionof the continent's petrol is sold to the United States, wheregasoline retails at less than half the cost.
Surprise could turn to alarm on hearing that thosetrans-Atlantic exports spiked sharply higher this month - justas fuel prices in euros and pounds sterling approached recordhighs.
Gasoline exports from European refineries - mainly inBritain, Italy, Spain, France and the Netherlands - to the U.S.east coast rose from 418,000 barrels-per-day (bpd) at thebeginning of January to 666,000 bpd at the start of Februaryafter U.S. gasoline futures prices spiked.
That is around one quarter of the European Union andNorway's total gasoline production in January Of 2.6 millionbpd.. The United States uses about 8.5 millionbarrels a day of gasoline.
"The demand from the U.S. is supporting gasoline prices atunseasonably high levels," said Harry Tchilinguirian, oilanalyst at BNP Paribas.
"With low starting (U.S.) stocks and heavy drawdownsexpected, imports will be increasingly critical in plugging thehole to meet U.S. demand. Imports will need to risesignificantly from here in order to make up for a lack ofsupplies," Bank of America Merrill Lynch said in a note thisweek.
With motorists switching to diesel, Europe has long beenover-supplied with gasoline and short of diesel while the UnitedStates, especially its densely-populated eastern coast, is shortof gasoline.
A series of refinery bankruptcies and closures on both sidesof the Atlantic over the past two years because of poor profitshas reduced the European refining industry's ability to meetfluctuations in demand on both continents.
That means spikes in U.S. demand can cause jumps in Europeanprices, if larger-than-normal volumes are diverted to the UnitedStates.
Benchmark European wholesale gasoline prices are up nearly13 percent since the start of the year to around $1,102 a tonne.
"Drivers have been caught between the pincers of a poundweakened against the dollar and soaring wholesale prices,"Britain's Automobile Association (AA) said. "This has broken theback of many family budgets and destroyed a great chunk ofpetrol demand," said its president Edmund King.
Adding to costs in a dollar-denominated oil market, thepound has dropped about 6.5 percent against the dollarsince the start of the year and the euro is down 3.5percent over the past month, bringing retail fuel prices to nearrecord highs in both currencies.
That has hit demand. British and French gasoline sales bothfell in January about 8 percent compared to a year earlier.
OIL COMPANIES, TRADERS UP SALES TO U.S.
Oil companies Total, Exxon Mobil, RoyalDutch Shell, BP and Valero supplygasoline to the New York region under term deals amounting to20-30 cargoes a month, each carrying 30,000-40,000 tonnes,regardless of U.S. market prices.
Those companies plus traders including Swiss Vitol andGunvor ship incremental volumes at times when relative marketvalues in Europe and the United States make it profitable forarbitrage trading.
Traders said 10-12 additional cargoes were shipped in recentweeks to meet U.S. demand after U.S. Hess Corp announcedin January the closure the 70,000 barrel-per-day Port Reading,New Jersey refinery.
U.S. fuel retail prices are much lower than in Europebecause they carry much less tax. U.S. east coast retailgasoline lately is priced around 84 cents a litre or $2.10 perlitre in the UK and $2 a litre on average in the European Union.
Booming shale oil supply in the United States has cut itscrude import needs but the closure of six East Coast andCaribbean refineries over the past three years has cut 1.2million bpd of U.S. refining capacity on an 18 million bpdmarket.
Some 1.8 million bpd of European refining capacity, 15percent, has been mothballed since 2009, according to DeutscheBank estimates.
BP (BP.)
