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US Petroleum Demand Hit 5-Year Low in 2008

America's demand for crude oil fell to its lowest level since 2003 last year, as record high prices to start the year and an ailing economy at the end of 2008 combined to sharply curtail consumption, new statistics show.

For all of 2008, U.S. petroleum deliveries—a measure of demand—fell 6 percent to 19.4 million barrels a day, with declines for all major products made from crude, according to a report released Thursday by the American Petroleum Institute, the industry's trade association.

Jet fuel deliveries fell 6.1 percent, distillate fuel oil, including diesel, was down 5.8 percent and gasoline deliveries slid 3.3 percent—the lowest level in five years, API said.

High prices at the pump last summer—more than $4 per gallon at one point—helped slash demand for oil. From November 2007 to October 2008, Americans drove 100 billion fewer miles than the year before, according to government figures.

"All told, the magnitude of the drop in U.S. petroleum demand ... was enough to offset the continued demand gains in developing countries around the world," said API statistics manager Ron Planting.

Oil surged into triple digits for the first time last January, the start of an ascent that would peak above $147 a barrel by July. Since then, amid fears of a prolonged global recession and crumbling worldwide demand, crude prices have plunged more than 70 percent.

U.S. crude oil production last year dropped below 5 million barrels a day for the first time since 1946, largely from lower Alaskan output and disruptions caused by hurricanes Gustav and Ike in the Gulf of Mexico. The two storms shut down nearly 100 percent of oil and natural gas production in the Gulf for a couple of weeks in September, and those disruptions lingered for months afterward.

API said Alaskan production fell 1.1 percent last year, while Gustav and Ike contributed to a 0.6 percent drop in annual crude output from the lower 48 states.

Import levels also reflected weakening demand, as combined crude and other product imports fell to 12.9 million barrels a day—the lowest level in five years.

On the refining side, production of gasoline fell 2 percent to 8.8 million barrels a day, while output of ultra-low sulfur diesel surged more than 10 percent to 3.1 million barrels a day to meet growing demand.

Ultra-low sulfur diesel, which helps reduce emissions, was introduced for highway use in 2006 and is available at gas stations across the United States. By December 2010, it will be the only highway diesel available at retail outlets, as mandated by the U.S. Environmental Protection Agency.

Over the next few years, locomotives and marine vessels also will be required to make the switch to cleaner-burning diesel to meet new federal emission standards.

API said the nation's refineries used about 84.9 percent of their full capacity in 2008, down about 4 percent from the prior year. Many refiners scaled back gasoline production in the latter half of last year as Americans cut back on driving and demand plummeted.

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