US EPA issues fuel waiver for Midwest states hit by refinery outage

By Shariq Khan and Rahul Paswan

(Reuters) -The U.S. Environmental Protection Agency (EPA) on Thursday issued an emergency waiver to help alleviate fuel shortages in four Midwest states where the supply of gasoline has been impacted by the shutdown of a refinery in Joliet, Illinois.

Exxon Mobil shut down the 251,800 barrel-per-day Joliet refinery due to a power outage after a storm on July 15. Although power was restored to the refinery by July 24, the refinery is likely to restart operations only in mid-August, industry monitor IIR Energy said on Thursday.

The EPA's waiver, which applies to Michigan, Wisconsin, Indiana and Illinois, suspends federal anti-smog rules that require the sale of less volatile but more expensive gasoline in the summer. The agency often issues such waivers to places hit by unforeseen supply disruptions.

The waiver applies through Aug. 20, the EPA said. It comes in response to requests from governors of the four states.

Gasoline prices have surged in the Midwest as a result of the Joliet refinery outage. Average retail prices in Illinois rose nearly 18 cents since the Joliet outage to over $4 a gallon as of Thursday, according to data from tracker GasBuddy.com.

Prices in Michigan jumped by 15 cents and in Wisconsin by 14 cents, the data showed, even as the national average price declined marginally over the same time frame.

Prices should decline over the coming days as a result of the waiver, GasBuddy analyst Patrick De Haan said. As the waiver allows Midwest suppliers to use more volatile fuel, it should expand the pool of gasoline available to them, De Haan said.

"This should certainly alleviate some of the price pressure," he said. "Until Aug. 20, they can use just about any different type of gasoline they can get their hands on," he said.

Gasoline stockpiles in the U.S. Midwest dropped by 2.3 million barrels over the past two weeks to 45.81 million barrels by July 26, the lowest since November, according to data from the U.S. Energy Information Administration.

(Reporting by Rahul Paswan in Bengaluru and Shariq Khan in New York; Editing by Kirsten Donovan and Marguerita Choy)