Refined Products Surge 21.3%; Domestic Output Drops : Oil Imports Hit 8-Year High in October

Oil imports surged to an eight-year high in October amid rising consumption and falling domestic production, the American Petroleum Institute reported Wednesday.

Total imports of crude oil and refined products rose 8.7% to an average 7.6 million barrels a day, compared to last October’s 7 million barrels, the Washington-based trade group said in its monthly report.

Imports of crude oil rose 4%, but the major increase came in gasoline and related products, which soared 21.3%, the report said.

The supply report came a day after the oil industry’s main lobbying group released a “white paper” at its annual meeting calling for government action to address the nation’s growing dependence on foreign oil and the sharp decline in U.S. production.

Since early 1986, U.S. production of crude oil has declined by more than 1.1 million barrels a day, hitting 8 million barrels a day last month, the trade group said.

During the same period, imports of crude and petroleum products have risen by more than 2 million barrels a day and now make up 43% of the oil consumed in the United States.

Among the suggestions offered by the trade group to boost U.S. output were tax incentives and a reduction in environmental constraints that keep the industry from exploring in designated wilderness areas.

The group has said that it is neither for nor against an oil import fee to help limit imports and increase domestic output.

While offshore production of oil in the Gulf of Mexico recovered from September’s hurricane disruptions, domestic crude output last month was down 330,000 barrels a day, or 3.9%, from a year ago. Alaskan production, which accounts for a quarter of all domestic output, rose slightly, but overall production in the lower 48 states declined.

The decline in drilling activity over the past three years has contributed to the erosion of domestic production, with the number of available rigs down 40% since 1985, the report said.

Meanwhile, the report said, gasoline consumption soared last month, with deliveries rising 4%. Deliveries of all petroleum products rose 5.5%.

Analysts said the current demand for gasoline was surprising, matching levels of the Fourth of July holiday period rather than the normal seasonal tapering off.

However, consumption remains below levels of a decade ago, the report said.

Deliveries of distillate fuels--primarily heating oil--rose only a fraction despite an increase in consumption, the report said. Residual fuel oil deliveries were up 28.4% from last year.

The report said the jump in imported refined products was not enough to offset the large increase in deliveries. Consequently, total inventories fell by 11 million barrels in contrast with a normal seasonal buildup of 5 million barrels in previous years.

Supplies of crude oil, however, rose by 12 million barrels.