Demand for Oil Drops for First Time in 7 Years

U.S. demand for oil dropped for the first time in seven years in 1990, depressed by the slowing economy, warm weather and higher prices after Iraq’s invasion of Kuwait, the oil industry reported today.

The American Petroleum Institute, the industry’s trade group, said in its year-end report that for the year, deliveries fell 2.1% after being nearly flat in 1989.

“Higher crude and product prices following the Iraqi invasion on Aug. 2, the slowing economy and mild weather in both the first and fourth quarters, which depressed heating-related demand, all contributed,” the API said.

Warm weather accounted for about half the drop in demand, the report found.

Deliveries of gasoline, which were running 3% less than 1989 at the end of the year, fell 1.7% on the year, “the first significant annual decline in eight years,” the API said.

Factors contributing to the decline were higher prices, which included increases in state and federal taxes, and the slowing economy, it said.

“The effects of higher prices and weakening economy were clearly evident in the drop-off in highway travel toward the end of the year,” the API said.

Deliveries of distillates, which include heating oil as well as diesel and jet fuels, dropped 3.5% from 1989--the first annual decline in eight years.