U.S. oil demand fell to the lowest level in 16 years in 2012 as economic growth weakened while domestic [oil] output surged the most in more than 150 years, the American Petroleum Institute said.
Total petroleum deliveries, a measure of demand, dropped 2 percent from 2011 to 18.6 million barrels a day last year, the lowest level since 1996, the industry-funded group said in a monthly report today. Oil production increased the most since 1859 to the highest level in 15 years, the API said.
“The demand decline is driven by the weak economy,” John Felmy, chief economist of the API, said in a phone interview. “You have weak gasoline demand, which is tied to employment and retail sales. And you’ve got weak diesel demand that reflects a slowdown in the manufacturing sector.”
Domestic oil production jumped 779,000 barrels a day in 2012, or 14 percent, to 6.43 million, the API reported. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma.