Oil Imports Up Sharply in July Amid Falling U.S. Demand : Energy: The latest statistics illustrate a trend: Major U.S. producers are shifting from domestic to overseas sources.

U.S. imports of raw crude oil and its derivatives toppled a 17-year-old record last month, though overall demand for petroleum products declined.

The import level, described in a monthly report released Wednesday by the American Petroleum Institute, is an indication of a well-established trend in the U.S. economy: Business and individuals are becoming increasingly dependent on foreign oil.

Taken together, imports of crude oil and petroleum products in July, at an average of 10.059 million barrels daily, were up 9.1% from the previous July, according to the API, the trade group for major U.S.-based oil companies.

Imports last month accounted for about 58% of domestic demand, another record. It was also the first time imports exceeded the level of 10 million barrels a day. The previous high mark occurred in 1977, when imports briefly surged to an average volume just short of 10 million barrels daily. The API said declining domestic oil output was mostly to blame for the extra imports.

“In contrast with the surge in imports in July, domestic deliveries lagged behind recent trends and actually declined,” the API said.

Deliveries of oil products--a key measure of demand--amounted to 17.260 million barrels a day last month, 0.6% below the level reported for July, 1993.

Last month’s dip notwithstanding, the API said that “the strength of the economy and other indicators suggest that underlying growth in petroleum consumption has not slackened to any significant degree.”

Among oil products, the biggest percentage decline was registered for residual, or heavy fuel oil, which is burned by electric utilities. Demand for residual dropped 10.1% from the year-ago period to 970,000 barrels a day, mainly because of cooler weather across the nation and a price shift that gave natural gas an advantage in the utility fuels market.

Gasoline demand was also down. It slipped 0.7% from July, 1993, to 7.733 million barrels daily. The institute pegged that decline to a short-term fluctuation. “It seems unlikely that the month’s decline in (gasoline) deliveries corresponded with any major slackening in underlying demand,” the API said.

On the plus side, demand for kerosene, or jet fuel, rose 7.7% in July to 1.441 million barrels daily compared to July, 1993, and orders for “distillates” such as diesel fuel and home heating oil rose 2.5% to 2.740 million barrels a day.

In the kerosene market, airlines are cutting fares and moving more passengers, and the military is completing a conversion from naphtha-based fuel to kerosene, the API said. Distillate use rose on extra demand from trucking companies and railroads.

U.S. oil output declined 1.9% in July to an average of 6.56 million barrels a day. American oil production is down sharply from the early 1970s, when the nation was pumping more than 9 million barrels daily.

The decline is attributable to several major trends. U.S.-based oil companies, frustrated with environmental laws and prohibited from drilling in many promising areas, are shifting the focus of exploration activities overseas. Also, major oil fields are being depleted.