U.S. Petroleum Demand Dropped Slightly in 2006, Second Straight Annual Declineadmin
While oil companies reaped gargantuan profits in 2006 amid high prices, U.S. demand for petroleum dipped for the second year in a row, a trade group said Friday.
Total petroleum deliveries, a measure of demand, fell by roughly 1 percent to 20.6 million barrels per day, down from 20.8 million in 2005, which was below the 2004 level, according to a report by the American Petroleum Institute.
Residual fuel oil deliveries experienced the steepest decline, falling nearly 27 percent to 673,000 barrels per day as industrial and electric utility facilities made major shifts to natural gas, the report said.
Airlines continued to conserve fuel as best they could, resulting in a 2.8 percent drop in jet fuel deliveries to about 1.6 million barrels per day.
The year’s largest increase in demand was for distillate fuel, which includes highway diesel and heating oil. Deliveries of distillate fuel rose 1.3 percent to about 4.2 million barrels per day.
Gasoline demand rose 0.8 percent to average more than 9.2 million barrels per day. The slight bump was met entirely by ethanol blends, which rose by nearly 35 percent, to an estimated 5.4 billion gallons, API said.
“Our figures show modest increases for some products but a decline in overall oil demand,” said Ron Planting, manager, information and analysis, for API. “That decline came as airlines continued to find additional ways to economize on fuel, and as industrial users and electric utilities substituted less expensive natural gas for heavy fuel oil.”
Despite the dip in demand, U.S. refineries and blenders produced record amounts of gasoline and distillate fuel oil in 2006, and many also produced massive quarterly profits.
But there may be a leak at the pump. Since rising to more than $78 per barrel last July, crude oil prices have plummeted in recent weeks, briefly falling below $50 per barrel Thursday.
Mild winter weather in the Northeast and growing energy stockpiles has caused a more than 17 percent drop in oil since the end of 2006, and Chevron Corp., ConocoPhillips and BP PLC earlier this month warned that lower prices would dampen fourth-quarter earnings.
The report also showed:
– Total petroleum imports fell slightly to 13.6 million barrels per day, with a 1.9 percent drop in products partially offset by a 0.5 increase in crude oil imports. Imports accounted for 66 percent of domestic petroleum use for the year.
– U.S. crude oil production slipped 1.1 percent in 2006 to slightly more than 5.1 million barrels per day because of a 12.1 percent decline in Alaska due to the shutdown of a major pipeline. But output in the lower 48 states saw its first increase in six years, buoyed by the Gulf Coast’s recovery from 2005s hurricanes and new production elsewhere.
– Oil well completions in 2006 were the highest in 18 years, and natural gas completions reached an all-time high.