January 29, 2008

2007 Oil Imports Drop 1.9%



U.S. fuel production reached a record high in 2007 as refinery capacity expanded for the 11th straight year, API data show. U.S. crude oil production also rose in 2007, the first annual increase since 1991, according to API’s year-end Monthly Statistical Report.

The API statistics also showed that U.S. oil demand was flat in 2007, the third straight year of stagnant or lower oil demand in the world’s largest oil-consuming nation.

Given the higher domestic production and flat demand, total oil imports fell 1.9 percent from year-ago levels, though imports still cover about 65 percent of U.S. oil demand.

Total U.S. petroleum deliveries, a proxy for demand, averaged 20.7 million barrels per day, the same level seen in 2006, following a decline of 0.6 percent in that year. In the fourth quarter alone, deliveries slumped 0.4 percent.

Despite a one percent year-on-year increase in the first quarter, gasoline demand was lagging about half a percent below 2006 levels by the fourth quarter. On the other hand, distillate fuel oil demand rose 1.5 percent in the year amid rising diesel demand and higher home heating demand.

The demand data includes an increase in the amount of ethanol blended into gasoline, which averaged more than 400,000 barrels per day. Excluding ethanol, which accounted for nearly five percent of all gasoline sales during the year, total domestic oil deliveries in 2007 actually fell half a percent. An estimated 6.7 billon gallons of fuel ethanol were used by refiners in 2007, some two billion gallons more than the 4.7 billion gallons required by law but more than two billion gallons less than the recently-passed requirement for 2008.

Press Release

All this is good news, but I am not sure what to make of the last paragraph. The picture should get a little clearer when the EIA releases the November and December petroleum and ethanol numbers. Once the 2007 number are completed I will do a writeup to compare the numbers and see what effect biofuels had on consumption as I did in this earlier post on the 2006 numbers.

Update: I found another article that goes along with this report and has some interesting quotes in it.

The 11-month rise of 50,000 barrels a day in U.S. gasoline demand (more than half the size of a 98,000 barrels a day rise a year ago) appears to be made up entirely of higher ethanol - rather than petroleum - content in the fuel.

Ron Planting, manager of information and analysis at the American Petroleum Institute, the Washington, D.C.-based trade group, said the volume of ethanol blended into gasoline supplied to the market was up, while the volume of petroleum in the fuel was down in 2007.

"Weak growth in gasoline demand, combined with the substantial increase in ethanol blending in 2007 resulted in the year's increase in gasoline supply coming entirely from ethanol," Planting said.

"Looking at either January-November or the full year, the increase in blended ethanol was larger than the rise in overall gasoline deliveries," he said. "My estimate is that ethanol blending increased about 90,000 barrels per day in 2007 over 2006.

Total domestic gasoline deliveries for the full year rose only about 35,000 barrels per day." Planting said API estimates that ethanol accounted for about 5% of the 9.287 million barrels a day of gasoline delivered in 2007, up from a 4% share of the 9.253 million barrels a day in 2006.

CattleNetwork

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