API: US petroleum demand rises 'only modestly' in 2003

Feb. 23, 2004
US demand for petroleum rose "only modestly" in 2003, part of a long-term trend in which US oil consumption has increased by only a fraction of the rate of the overall economy, officials of the American Petroleum Institute reported last month in Washington, DC.

US demand for petroleum rose "only modestly" in 2003, part of a long-term trend in which US oil consumption has increased by only a fraction of the rate of the overall economy, officials of the American Petroleum Institute reported last month in Washington, DC.

The US economy consumed 0.7 bbl of oil for each $1,000 of economic output in 2003, said API officials, down 16% from 1993 and 31% from 1983, as measured in 2000 currency.

Efficiency gains and changes in fuel sources and in the structure in the economy contributed to the decline in the amount of crude used vs. the gross national product.

US petroleum use was lower by nearly 4 million b/d in 2003 "than it would have been without the efficiency gains and other changes of the past 10 years," API officials said.

Deliveries inch up

Domestic deliveries of petroleum products increased by just 1.1% last year, while US economic growth was estimated at 3%, API reported. Gasoline deliveries increased by only 0.6% as higher prices and a sluggish economy slowed demand growth.

Click here to enlarge image

US demand for distillate fuel oil, including diesel and heating oil, grew by 4.1% last year, with increased use of diesel for highway transportation and substitution of fuel oil for more expensive natural gas at electric utilities and industrial sites.

Click here to enlarge image

Residual fuel oil deliveries increased by more than 10% during the year. However, jet fuel deliveries declined for the third consecutive year, "reflecting a lagging demand for air travel combined with many airlines' efforts to fly fewer and fuller flights," API said.

Record low oil stocks

Yet commercial US crude inventories ended 2003 at 268 million bbl—the lowest yearend level since 1974.

That, said API, "represented a combination of a decades-long trend to more-efficient inventory management" in conjunction with "apparent husbanding of crude inventories over the past year or more in the face of a relatively tight world market for crude oil."

Inventories of gasoline, distillate, and residual fuel oil ended the year at slightly above-average levels, however, while jet fuel stocks were slightly below average.

Total US imports of crude and petroleum products jumped by more than 6% in 2003 after slipping by nearly 3% in 2002.

Crude imports increased by more than 5%, while imports of petroleum products jumped by nearly 10% last year.

Gasoline imports hit an all-time high of 861,000 b/d in 2003. Distillate imports averaged 334,000 b/d for the year, nearly matching the record level of 2 years earlier, API reported.

Overall processing at US refineries increased by 2% last year, raising refinery inputs to the highest level ever, said API.

Gasoline production averaged 8.46 million b/d, nearly matching the record level of 2002.

Distillate output hit a new high of 3.72 million b/d. US refineries were running at 92.4% of total capacity in 2003, up from 90.7% in 2002 "and well above rates typical in many other industries," API officials said.

US oil production remained "nearly steady" in 2003, API reported. Although Lower 48 production was not curtailed by hurricanes to the same degree as in 2002, said API officials, "whatever bounce-back in offshore production that may have taken place was completely offset by the longer-term decline trend in other regions."

Low natural gas stocks

US inventories of natural gas fell sharply to record low levels in the face of increased demand in 2003.

"The price of natural gas increased sharply in February and March and, due to limited additional supply and strong storage demand, remained high throughout the year," said API.

As a result, US production of natural gas liquids fell by 9% from 2002 levels.