U.S. Oil Imports in 1986 Hit Highest Level Since 1980

Stimulated by falling prices, U.S. oil imports last year rose to their highest level since 1980, the American Petroleum Institute said Wednesday.

U.S. users brought in an average of 6 million barrels a day of crude oil and refined products from overseas suppliers, up 22% from the 4.9 million barrels a day imported in 1985, the oil industry trade group reported in a year-end statistical review.

Imports rose steadily through the year to average 6.5 million barrels a day in December, 13% above the December, 1985, level.

That gave imports a 35% share of the market for the year as a whole and 39% in December.

High Proportion

The total of 2.2 billion barrels imported during 1986 was the most in any year since 2.5 billion barrels were shipped to the United States in 1980, when the import market share was 40%.

In December, 1985, crude oil sold for about $28 a 42-gallon barrel. Just after that, Saudi Arabia doubled its production to 4.4 million barrels a day and the price fell to below $10 in July.

Since then, members of the Organization of Petroleum Exporting Countries have agreed to restrict production enough to hold the price at $18. Current prices are fluctuating around $19 under the influence of a severe cold snap in Europe.

Effect on U.S. Output

Edward Murphy, API’s director of financial analysis and statistics, said the institute had estimated that five years of $20 oil would reduce U.S. production by 1.5 million barrels a day from the 1985 figure of 9 million barrels a day; five years of $15 oil would trim output by 2.7 million barrels a day and $28 oil would mean crude output would remain stable.

“The experience to date is roughly consistent with that,” Murphy said.

Total U.S. petroleum demand expanded 4.8% during the year as the transportation and utility sectors increased usage sharply.

Domestic crude oil production fell from a daily average of 9 million barrels to 8.7 million barrels during 1986. But the decline continued throughout the year, and December’s average production of 8.3 million barrels was 7.7% below the 9 million barrels recorded in December, 1985.

U.S. crude oil production costs are far higher than most of the world’s. Low prices not only lead to idle exploration rigs but also to abandoned producing wells, frequently when the next maintenance expenses must be met.

While some economic sectors clearly benefited from low oil prices, most forecasters seem to have underestimated the speed at which the oil sector would be hurt and to have overestimated the spread of benefits elsewhere, said Michael Canes, a vice president of the institute.

“A lot of people did forecast a jump in (gross national product). I saw estimates on the order of 1% over what we would otherwise have had,” he said. “It’s not clear that happened.”

Although final figures aren’t in yet, Commerce Department analysts estimate that gross national product--the total of all goods and services sold in the economy--grew by 2.7% in 1986.