NCPA - National Center for Policy Analysis

Europe Exporting More Gasoline To U.S. Motorists

October 28, 2002

Because of tax incentives, one out of every three new cars sold in Europe is powered by a diesel engine. In France, more than half the cars are diesel. By contrast, diesel accounts for less than 1 percent of U.S. car sales.

Europe's embrace of diesel-powered cars has left refiners there with a glut of gasoline, which they are sending to the U.S. The process is helping keep U.S. gasoline prices in check, despite fluctuations in world crude oil markets.

  • European gasoline exports to the U.S. have climbed 82 percent since 2000.
  • While crude oil prices have moved between $18 and $30 a barrel this year, pump prices for gasoline here only fluctuated two cents a gallon between April and September.
  • European refiners say the U.S. -- where consumers have failed to accept diesel with the same enthusiasm as the French, Italians and Germans -- is the only market that can handle the quantities of excess gasoline that Europe produces.
  • Demand for gasoline here is up nearly 3 percent this year -- while demand is down 2 percent in western Europe and is expected to continue to decline as more Europeans shift to diesel cars.

The increased European shipments have crimped U.S. refining profits and experts say they could further discourage U.S. refiners from making investments to expand their refining capacity. Federal regulators have demanded that refiners upgrade plants to meet new requirements for low-sulfur gasoline and diesel fuels.

Source: Alexei Barrionuevo, "Europe Drives Up Gas Exports, Keeping U.S. Pump Prices Low," Wall Street Journal, October 28, 2002.

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