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Released on June 24, 2009
(Next Release on July 1, 2009)
U.S. Oil Demand and Import Sources: Recent Developments and Key Factors Affecting the Future
With high oil prices and the economic recession, both U.S. and
global oil demand declined in 2008. In the United States, domestic
crude oil production, refinery outputs, finished product net imports,
and crude oil imports all declined from prior year levels.
Historically, U.S. petroleum demand peaked in 2005 at 20.8 million
barrels per day (bbl/d), remained relatively flat in 2006-07, and then
dropped to 19.4 million bbl/d in 2008. As a general rule, U.S.
petroleum product demand tends to be met first by domestic refinery
output, with finished product imports satisfying the remainder. (This
is something of an oversimplification; sometimes nearer and cheaper
product imports from Canada, Mexico, the Caribbean, or even Europe
displace U.S. refinery production.) U.S. refinery inputs, in turn, tend
to be satisfied by domestic crude oil production first, and imports
second. Consequently, we tend to think of the requirement for crude oil
imports to the United States as largely the remainder of U.S. refinery
crude oil requirements less domestic crude production. Any crude oil
imports over or under this level tend to make crude oil inventories
(stocks) rise or fall.
In 2008, U.S. crude oil refinery inputs dropped by 511 thousand
bbl/d, and domestic crude oil production decreased by 109 thousand
bbl/d, leaving a decrease in the “need” for crude oil imports of 402
thousand bbl/d. However, crude oil imports fell by only 275 thousand
bbl/d, and crude oil stocks grew. (Crude oil exports are negligible.)
Turning to the sources of crude oil, Figures 1 and 2 show trends in
crude supply from various world regions since 2000. About half of U.S.
supply has been coming from the Western Hemisphere (Canada, Mexico and
South America combined). Canada has generally been a growing source of
U.S. imports since the early 1980’s, and in 2008 represented about 40
percent of Western Hemisphere supply. At the same time, imports from
Mexico and Venezuela, which averaged about 57 percent share of Western
Hemisphere crude supply from 2000-2005 to the U.S., have been
declining. In 2008, these two countries were down to about 46 percent
of Western Hemisphere supply. Brazilian supplies have increased and are
expected to continue to increase in the future, but represented less
than 5 percent of Western Hemisphere crude oil imports to the U.S. in
2008. Outside the Western Hemisphere, supplies from Europe have
declined with North Sea production, while supplies from Africa (e.g.,
Algeria and Angola) have grown. The Middle East remains a major source
of supply to the U.S., providing over 24 percent of our crude imports
in 2008.
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Turning to 2009, crude oil imports continued to decline during the
first quarter 2009, dropping 235 thousand bbl/d from first quarter
2008. Figure 3 shows the changes in imports between first quarter 2009
and 2008. One significant change from the longer term trend has been a
decline in crude oil imports sourced from the Middle East, mainly
reflecting a decline in imports from Saudi Arabia and Iraq. U.S. crude
imports from Saudi Arabia dropped to 944 thousand bbl/d in March 2009,
their lowest level since November 1988. Declines in African imports
also stand out. Most of the first quarter decline in imports from
Africa stemmed from the loss of supplies from Nigeria, which dropped
almost 500 thousand bbl/d as political unrest continued to interrupt
production in that country. Increases from Angola and other African
countries helped to counter some of that loss. Total U.S. crude imports
from members of the Organization of the Petroleum Exporting Countries
(OPEC) fell below 5 million bbl/d in both February and March, the first
two consecutive months below that level since 2006.
Historically, economic recovery has led to a rebound in demand for
oil. As the U.S. comes out of its current economic downturn, the level
of crude oil imports will depend on several key factors. First, U.S.
crude oil production is expected to increase, mainly due to the start
of operations at several major platforms in the deepwater Gulf of
Mexico. Second, at least a modest portion of any demand growth will be
served by biofuels given the steadily increasing mandate for their use
required by the updated renewable fuel standard established by the
Energy Independence and Security Act of 2007. Third, demand growth
resulting from an improved economy will to some extent be offset by
requirements for increased fuel efficiency of new vehicles, an effect
that will tend to increase over time as the existing vehicle fleet
turns over.
Our future crude oil import sources will depend on production trends
in the different regions, as well as the mix of oil products demanded
by U.S. consumers, which affects the attractiveness of different crude
streams to U.S. refiners. With respect to production trends, it is
clear that OPEC members in the Middle East, who have absorbed the bulk
of production cuts made in the present global economic downturn and are
also adding to their production capacity, are well–situated to supply a
major portion of the oil that would be required to meet growing global
oil demand as the world economy recovers. Over the longer term,
decisions made regarding the pace of development in the Canadian oil
sands and Brazil’s major offshore resources will also have important
implications for the sourcing of U.S. crude oil imports. |
