U.S. Crude Oil Production Falls; Imports Hit High

U.S. crude oil production last year recorded its biggest decline ever while oil imports reached a 10-year high, the American Petroleum Institute reported Wednesday.

The institute, a trade association of the major oil companies, also said that although U.S. oil consumption increased only slightly, imports rose to 46% of total supplies. That was the second-highest level on record.

In releasing the data, Edward H. Murphy, an API official, said the production and import trends were “very disturbing and should be a focus of national concern.”

The figures confirm a continued decline of the domestic oil industry and are expected to add heat to a debate in Congress this year over whether exploration and production companies should get new tax breaks to stimulate drilling activity.

The Bush Administration has argued that declining U.S. oil production and increasing reliance on foreign producers is undermining national energy security.

In its year-end report, the petroleum institute said U.S. crude oil production averaged 7.6 million barrels a day in 1989. That was the lowest in 26 years and a record decline of 553,000 barrels per day, or 6.8%, from the 1988 total.

The previous biggest decline in domestic oil output was 474,000 barrels per day in 1949.

Alaskan oil production, which had increased almost every year since the start of production from the huge Prudhoe Bay field in 1977, fell by 140,000 barrels per day in 1989.

The report said the Alaska decline was exaggerated by maintenance work and traffic restrictions following the Exxon Valdez oil tanker spill last March, and that the “underlying decline trend” in Alaska was about 100,000 barrels per day.

Oil imports rose to 7.9 million barrels a day last year, up 8.2% from 1988 and nearly 60% above the 1985 level, when imports sank to a low of 5 million barrels a day before prices collapsed on the world market in 1986.

The report said that while imports from Western Hemisphere sources still accounted for about 43% of total imports in 1989, imports from the Persian Gulf continued to grow to 21% of the total.

Imports accounted for 46% of oil consumed in the United States last year. That was the second-highest ever, after the 47.7% level of 1977. As recently as 1985, imports’ share of domestic consumption was only 31.5%.

The rise in total U.S. energy consumption last year slowed to 1.9% after increases of 3.5% in 1987 and 4% in 1988, the report said.

Murphy, API’s director of finance, accounting and statistics, told a news conference: “I believe that it is particularly noteworthy that the increase in imports was driven not by increases in consumption, which has been the most important factor until last year, but by decreases in domestic production.

“While few analysts, myself included, are confident about our ability to anticipate developments in petroleum markets with great precision, most see substantial decreases in U.S. production, combined with moderate increases in consumption, leading to substantial increases in our demand for foreign crude oil,” he said.