The American Petroleum Institute predicts U.S. oil imports will average close to 50% for all of 1990 if present trends continue.
API's yearend figures show that U.S. oil production in 1989 logged the sharpest annual decline in history: 553,000 b/d.
To make up the shortfall in supply, imports climbed to a 10 year high.
Edward Murphy, API director of finance, accounting, and statistics, called the production slump "by far the most notable change in the petroleum market in 1989."
After 2 years of relatively moderate declines in U.S. crude oil production-about 300,000 b/d in 1987 and only 200,000 b/d in 1988-production began to fall rapidly.
Murphy said, "We ended up with a very substantial decrease of slightly over 550,000 b/d in U.S. production of crude oil last year. This was the largest U.S. decline we have ever experienced and the lowest level of domestic production in more than a quarter of a century.
"It is particularly noteworthy that the increase in imports was driven not by increases in consumption, which has been the more important factor until last year, but by decreases in domestic production."
Due to record cold temperatures at yearend 1989, U.S. distillate production, which increased 8% from 1988 to more than 3.3 million b/d, was the highest since 1978.
The decline in total stocks was about four times the 20 million bbl average of recent Decembers.
API said utilization of refinery capacity was 90.5%, about 1 percentage point below the record high set in the late 1970s.
IMPORTS RISING
U.S. oil imports last year were 46% of domestic consumption, or 7.59 million b/d, up 8% from 1988. They are projected to average a little more than 49% for 1990, exceeding that level in the latter months of the year.
The record for oil imports was 47.7% of domestic consumption in 1977.
API noted, "Imports that year, however, were well above what was required for immediate needs, with an average of more than 500,000 b/d ending up in inventories during the year.
"If adjusted for such stock changes, imports' share in 1977 would have been slightly less, at 44.8%, and 1989's share, at 46.7%, would have set an all time high."
About 21% of U.S. oil imports is from the Persian Gulf vs. only 5% in 1985.
"However," API said, "because the U.S. must compete in world markets for its additional petroleum needs, a more accurate picture of the external supply situation is given by patterns in overall world trade in petroleum, of which the Middle East accounts for more than 40%."
Murphy said a slowing of U.S. economic growth last year brought a corresponding slip in energy consumption growth from an average 3.9% in the preceding 2 years to 1.9% in 1989.
Essentially all of this growth took place in the use of natural gas, whose consumption grew by about 6% last year.
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