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The U.S. economy burned through an average of 20.46 million barrels of crude oil and related liquids each day last year, according to BP's (NYSE: BP) latest annual Statistical Review of World Energy. That was about 500,000 barrels per day (BPD), or 2.5%, more than 2017's total, and the largest demand increase in more than a decade. Overall, America accounted for 20.5% of the world's oil and related liquid consumption last year. (That includes liquid derivatives of coal and natural gas, as well as biodiesel and biogasoline products such as ethanol.)
What was interesting, though, is that the amount of oil the U.S. used to make fuels like gasoline fell last year. Here's a look at what actually drove demand growth.
Image source: Getty Images.
Drilling down into what driving America's growing oil demand
BP breaks oil demand into four categories:
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Light distillates, which are refined into things like gasoline.
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Middle distillates, which are the types of oil used to make jet fuel, heating kerosene, and diesel.
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Fuel oils, which are used as a marine bunker fuel for ships, as well as for home heating.
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Others, which are the types of oil that are turned into solvents, wax, and lubricants. This category also includes natural gas liquids (NGLs) like liquid petroleum gas (LPG) and ethane, which petrochemical companies use as the raw materials in manufacturing plastics and chemical products.
BP's report found that one of America's significant drivers of oil demand was in middle distillates; consumption rose by 3.8% to nearly 6 million BPD. That was due in part to strong economic growth, which drove demand for diesel to fuel 18-wheelers and other commercial vehicles. In addition, America is exporting increasing qualities of diesel and jet fuel to global markets where prices are higher.
BP's report also showed that demand in the "other" category grew at an even stronger 7.2% pace to 4.6 million BPD. That was due mainly to the completion of new petrochemical complexes domestically. CP Chem, a joint venture between refiner Phillips 66 (NYSE: PSX) and oil giant Chevron (NYSE: CVX), was one of several companies that finished U.S. petrochemical expansion projects in early 2018. Phillips 66 and Chevron invested $6 billion into three facilities, one of which will crack ethane to produce 1.5 million metric tons of ethylene a year. Ethylene is the most common building block for plastics, which is what the other two CP facilities will convert it into.
While American refineries and petrochemical plants processed more oil and liquids to make diesel and petrochemicals, they refined less of it into products like gasoline and fuel oil. According to BP, oil used to make light distillates fell by 0.1% last year. That was due in large part to the increasing fuel efficiency of new vehicles. Meanwhile, the amount of oil used to make fuel oils fell by 5.9% due to warmer winter temperatures across the U.S., as well as the ongoing shift toward heating homes with cleaner-burning natural gas.