U.S. crude oil prices lowest since 1930s depression

U.S. crude prices at yearend 1998, when adjusted for inflation, were at their lowest levels since the Great Depression of the 1930s, the American Petroleum Institute said.

API said December 1998 wellhead prices averaged less than $8/bbl, a 47% plunge from December 1997. For the whole year, wellhead prices dropped 37% in 1998.

Tough year

Paul G. Wakim, API director of statistics, called 1998 "one of the toughest years for the U.S. oil and natural gas industry."

U.S. crude oil production averaged 6.226 million b/d in December 1998, a 4.7% decline from December 1997. In comparing the 2 years, production fell about 2.5% in 1998.

The total number of operating rigs drilling for oil in the U.S. in December 1998 was only 155, a 60% decline from December 1997 and the lowest level since such records began in 1987, according to the latest survey by Baker-Hughes Co. U.S. rigs drilling for natural gas averaged 491 last month, a 24% decline compared with December 1997.

According to U.S. government statistics, 29,300 jobs were lost in the U.S. petroleum industry in 1998. Since early 1982, U.S. petroleum industry upstream employment has declined nearly 60%.

API estimated the number of completed oil wells in 1998 in the U.S. was 24,900, a 13% decline from 1997.

Gasoline prices

A steep decline in gasoline prices contributed to growth in U.S. gasoline deliveries (a key indicator of demand), which averaged 8.225 million b/d in 1998. This calculates to a growth rate of 2.6% vs. 1997.

However, API analysts believe this rate is understated, because of problematic federal government second quarter data not yet corrected. When they are, API estimates the 1998 gasoline deliveries growth will likely turn out to be the largest in more than a decade, at about 3%.

U.S. retail gasoline prices in 1998 were the lowest inflation-adjusted prices in history, averaging about $1.01/gal for regular conventional gasoline, according to the U.S. Energy Information Administration.

Demand, imports, utilization

API said U.S. distillate fuel deliveries in 1998 averaged 3.442 million b/d, a 0.2% decline from 1997. December 1998 deliveries of 3.376 million b/d dropped 9.1% from the same month in 1997.

U.S. kerosine jet fuel deliveries of 1.567 million b/d were down 1.9% in 1998 from the prior year, but up 2.2% last month vs. December 1997.

Natural gas liquids deliveries of 1.758 million b/d in the U.S. last year were down 3.2% from 1997; in December 1998, they were down 3% vs. December 1997.

U.S. crude oil stocks of 318.5 million bbl at yearend 1998 were up 4.5% compared with 1997, but they were down 5.4% last month vs. November.

Yearend 1998 distillate stocks rose 13% from 1997.

U.S. gasoline stocks in December 1998 reached 212.1 million bbl, for a 1.1% increase from December 1997, and total crude and products stocks rose 4.1% to 1,037,600,000 bbl last month vs. December 1997.

Meanwhile, U.S. refinery utilization rates during 1998 averaged 95.4%.

U.S. crude oil imports in 1998 averaged 8.57 million b/d, for a 4.2% increase from 1997. Imports as a percentage of domestic deliveries reached a new high in 1998 of 55.7%. For December 1998, imports were 8.515 million b/d, an 11.3% increase from the same month in 1997. Total U.S. crude and product imports in 1998 were 10.426 million b/d, a 2.6% increase from 1997.