The US is using spare refining capacity to export millions of barrels of oil products, while US domestic demand remains weak. One of the more common misunderstandings I see in energy circles right now is the idea that US oil demand has rebounded strongly since 2008. It hasn’t. The explanation can be found in the widening divergence between oil that’s imported for domestic usage, and oil that’s imported to convert into oil products for export. Let’s first take a look at the last 15 years of US petroleum consumption. This data is now updated through October, 2010. | see: US Annual Petroleum Consumption Quadrillion BTU ’95 -’10.
US domestic demand for oil was up a weak 1.1% in 2010, coming off a low, crashy, base in 2009. But worldwide demand for oil especially from developing nations is soaring. The result? The US is using its spare refining capacity to turn oil into products, like diesel–for export. Behold the growth in Total Oil Product exports since the start of 2008. These have nearly doubled from near 1.2 million barrels per day at the start of 2008, to just above 2.2 million barrels per day as of mid-January 2011. | see: US Total Oil Product Exports 2008 -2010 in kb (thousand barrels).
When you hear a newsletter writer, oil analyst, or podcast saying that US domestic oil demand has rebounded strongly since 2008–talking in terms of millions of barrels of restored demand–the mistake they are making is obvious: they are missing the heroic rise in US exports of gasoline, diesel, and distillate. The error comes in part with the myriad measures EIA uses to measure US demand for oil. Hopefully my disentangling of this data here, is of some help.