Demand Drops Dramatically
U.S. oil deliveries down significantly in first-half 2008; gasoline deliveries fall, too
WASHINGTON -- During the first half of 2008, a period when world crude oil prices were reaching new highs, U.S. petroleum deliveries—a measure of demand—experienced their largest year-to-year decline in 17 years, the American Petroleum Institute (API) said Friday in its latest Monthly Statistical Report. Deliveries fell 3% in the first half of 2008 from a year earlier. Gasoline deliveries alone fell 1.7%, their first significant decrease for a six-month period since 1991. Deliveries of all other major products also shared in the decline.
"At 20.08 million barrels per day, total [image-nocss] demand was the lowest in five years," said API statistics manager Ron Planting. "And the decline in gasoline demand was the first significant one recorded in 17 years. Higher pump prices and a slowing economy were undoubtedly factors."
U.S. petroleum deliveries growth had already been faltering during the prior three years, managing only to hold relatively steady over that period. With this year's decline, first-half deliveries, at 20.08 million barrels per day (bpd), were at their lowest for any six-month period since early 2003.
Second-quarter results alone also showed a decline in overall deliveries of 1.8%, led by a drop for gasoline deliveries of 2%; however, the warmer-than-average winter that had slowed distillate deliveries in the first quarter was not a factor in the second quarter, when demand for diesel apparently continued to be more robust than for gasoline.
The second quarter's deliveries of distillate fuel oil (including both diesel fuel and heating oil) rose over year-ago levels by 2.1%.
Reflecting continued strong demand for diesel fuel, industry production of that product set new records for the first half. Distillate production over all averaged 4.23 million bpd, the highest ever for any six-month period. Production of low-sulfur diesel was also a record, at nearly 14% higher than for first-half 2007. Included within that was a nearly 17% increase in output of ultra-low sulfur diesel, the main fuel required for on-highway use. With lagging gasoline demand, gasoline production for the six-month period was down about 1% from a year ago, but was still the second highest amount ever for any January-June period.
The effects of slowing demand were visible in U.S. petroleum imports, which sank to their lowest first-half level since 2003, at less than 13 million barrels per day. Crude oil imports fell 2.5% from a year earlier, while product imports slipped nearly 10%. Imports of most major products showed declines.
Crude oil inventories declined to 301 million barrels at the end of June, down 54 million barrels from last year's recent-year record and the lowest mid-year level since 2003. Gasoline inventories ended the month at 212 million barrels, up 3.6% from a year ago, while distillate inventories slipped 3% from a year ago to 120 million barrels; however, inventories of ultra-low sulfur diesel were up more than 8% from a year ago.
The first half's domestic crude oil production slipped 2.2% from a year ago. Production in the lower 48 states fell 2.1% to average 4.4 million barrels per day, even with year-to-year increases in some regions of the country. Alaskan crude oil output was down 6.4% for the first half, averaging 725,000 bpd for the first six months.