As other economic indicators are headed up — think housing and manufacturing — the American Petroleum Institute reported that U.S. demand for petroleum products in February hit a 20-year low for the month.
American’s demand for crude-based fuels dropped more than 4 percent in February compared to a year earlier, API reported this week. Meanwhile, U.S. crude oil production jumped 13.9 percent over the previous year.
“Declining numbers for most of the key products isn’t consistent with a robust recovery,” said John Felmy, chief economist for the trade group, which represents the oil and natural gas industry. “Although there’s been some encouraging news on employment and manufacturing, fuel demand is an important indicator of where the economy is — and it’s headed in a different direction.”
Demand for gasoline fell 3.1 percent from a year earlier, while demand for residual fuel oil, used in industrial boilers, fell by 12.6 percent.
Use of distillate fuel, a category that includes diesel and heating oil, fell 7.3 percent, while demand for jet fuel dropped by 8.7 percent.
The drop in demand was reflected in refineries operating at lower rates, according to the group, which reported that refineries operated at an average utilization rate of 83.8 percent in February, down 2.1 percent from January and down 2.7 percent from February 2012.
But some U.S. refineries, especially those along the Gulf Coast, have been able to make up for dropping domestic demand by increasing their share of the export market.
They also have benefitted from growing U.S. shale production of crude oil, using that cheaper crude oil to replace more expensive imported oil to keep their production costs down.
Earlier this week Phillips 66 announced several rail and pipeline agreements to bring domestic crude to its refineries.
API reported that total U.S. crude oil production reached nearly 7.1 million barrels per day in February, the 17th straight month of year-over-year increases.