Aug 1 (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 ( XOM ) 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.