U.S. Fuel Demand Rose the Most in Six Years in 2010, API Says

U.S. fuel consumption increased at the fastest pace in six years in 2010, a sign that the economy is rebounding, according to the American Petroleum Institute.

Total deliveries of petroleum products, a measure of demand, climbed 2.3 percent last year to 19.2 million barrels a day, the industry-funded group said today in a report. Consumption in December gained 1.2 percent to 19.5 million barrels a day.

“What we’re seeing is a return to hopefully consistently better economic growth,” John Felmy, chief economist with the Washington-based API, said in an interview.

Demand for ultra-low sulfur diesel, the type used on highways, rose 13 percent to average 3.26 million barrels a day last year, the report showed. Use of the fuel during December rose 16 percent to 3.41 million barrels a day.

Total use of distillate fuel, a category that includes diesel and heating oil, increased 4.8 percent to 3.81 million barrels a day in 2010. Demand climbed 6.9 percent to 4.13 million barrels a day in December.

Deliveries of gasoline increased 0.6 percent during the year to 9.05 million barrels a day, the report showed. Consumption last month fell 0.8 percent to average 8.86 million.

“Gasoline demand was still a little weak, which reflects the employment situation and retail sales,” Felmy said. Diesel demand is “closely correlated to GDP” and supports forecasts that the economy is improving.

Stronger Economy

U.S. gross domestic product grew 2.6 percent in the third quarter, the Commerce Department reported last month. The world’s largest economy expanded at a 1.7 percent pace in the previous three months.

The U.S. unemployment rate fell 0.4 percentage point to 9.4 percent in December, according to figures from the U.S. Labor Department. It was the lowest level since May 2009. Retail sales gained 0.6 percent last month, the smallest increase since July, Commerce Department figures showed.

Jet-fuel use climbed 3.9 percent in 2010 to an average 1.45 million barrels a day. Daily demand averaged 1.49 million barrels in December, an 8.6 percent gain.

U.S. crude-oil production rose 2.4 percent to an average 5.49 million barrels a day last year. Output in the lower 48 states increased 1.4 percent to 4.87 million barrels a day in December, compared with the year earlier. Alaskan production slipped 0.5 percent to 652,000 barrels a day in the same period.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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