?Total U.S. petroleum demand shrank to its lowest level since 2003, due to the combined effects of higher prices in first-half 2008 and a weakening economy as the year progressed, according to the American Petroleum Institute’s (API) monthly statistical report, which reflects data from December as well as full-year 2008.


For the year, U.S. petroleum deliveries, a measure for demand, fell 6%—the most rapid rate of decline since 1980—to 19.4 million barrels per day, with reductions observed for all major products.


Gasoline deliveries dropped 3.3% to their lowest level in five years. Deliveries of distillate fuel oil, which includes diesel fuel, fell 5.8%, while jet fuel deliveries slid 6.1%. Residual fuel oil deliveries dropped more than 14%.


“All told, the magnitude of the drop in daily U.S. petroleum demand, which totaled more than 1.2 million barrels, was enough to offset the continued demand gains in developing countries around the world,” says Ron Planting, API statistics manager.


U.S. oil production in 2008 sank below 5 million barrels per day for the first time since 1946, as a result of lower Alaskan production and hurricane shut-ins in the Gulf of Mexico. Alaskan output fell 1.1% for the year to 714,000 barrels per day, the lowest rate since the Trans-Alaskan Pipeline came online in 1977.


In the Gulf of Mexico, an estimated 63 million barrels of oil were forced offline following hurricanes Gustav and Ike, leading to a 0.6% drop in annual oil production from the Lower 48. Had those barrels not been shut in, Lower 48 production would have risen about 2% over the prior-year level.


Import volumes also reflected weakening petroleum demand in 2008: The combined volume of oil and product imports dropped to the lowest level in five years at 12.9 million barrels per day. Crude oil imports fell 2.2% to under 10 million barrels per day, while product imports shrank 10.6%, to under 3.1 million per day.


Despite the sharp drop in domestic product demand, refineries still set some records in 2008. Distillate output reached an all-time high of 4.3 million barrels per day, up 4.1% over 2007, with ultralow-sulfur diesel output surging more than 10% from the prior year to 3.1 million barrels per day.