WASHINGTON - While oil companies reaped big profits in 2006 amid high prices, U.S. demand for petroleum dipped last year to below 2004 levels, a trade group said yesterday.
Total U.S. petroleum deliveries, a measure of demand, fell by roughly 1 percent to 20.6 million barrels per day, according to a report by the American Petroleum Institute.
That's down from 20.8 million barrels a day in 2005 and below the 2004 level of 20.7 million barrels a day. The group said the figures are preliminary and may be adjusted.
The analysis was released one day after the Paris-based International Energy Agency estimated that oil demand in the world's industrialized countries declined by 0.6 percent in 2006. Global demand rose in 2006 due to the strength of consumption in China and the Middle East, but the world's appetite has grown at a slower pace for two straight years.
"We've entered that era on a worldwide basis where demand is growing more slowly," Citigroup oil analyst Tim Evans said. "Oil producers may have priced themselves out of some markets."
Most analysts are forecasting slower economic growth in the United States in 2007, in part because of high energy prices but also due to the financial reverberations caused by a slowdown in the housing sector.
In the United States, still the world's largest energy-consuming nation, the decline was steepest for residual fuel oil deliveries, off nearly 27 percent to 673,000 barrels per day as industrial and electric utility facilities made major shifts to natural gas, the report said. Residual fuel oils are what remain of the crude oil after gasoline and the distillate fuel oils are extracted through distillation.
Jet fuel demand declined by 2.8 percent to 1.6 million barrels a day, as airlines conserved fuel as best they could.
The year's largest increase in U.S. 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.