Published by the American Geological Institute
and Trends in the Geosciences
OPEC production cuts drove crude oil prices up and imports down and put a vise grip on global markets during 1999. At the dawn of 2000, U.S. petroleum and crude oil stocks had significantly declined from year-end 1998, according to the American Petroleum Institute’s 1999 Year End Statistical Report. During 1999 total U.S. crude oil and petroleum inventories dropped 12.7 percent, or 136 million barrels. U.S. crude oil inventories alone dropped 9.3 percent to reach a three-year low of 293.3 million barrels.
The draw on inventories resulted from falling imports and domestic production during 1999. Total imports dropped 6.2 percent over the year. In combination with 1998 imports, the two-year decline of 1.7 percent reflected the slight decrease from the 1998 record-high U.S. demand. The significant drop in domestic crude oil production can be attributed in part to the 10.7-percent decline in Alaskan production, which fell to just over one million barrels per day. As a result, the United States saw the largest annual decline in domestic production in 10 years: a 5.6-percent drop to an average daily output of 5.9 million barrels.
Moving into the year 2000, fluctuating global markets and increased refinery runs caused a draw on inventories that saw January 2000 close with the lowest month-end inventory in almost 25 years, according to the American Petroleum Institute’s Weekly Statistical Bulletin released Feb. 1. The drop in crude oil stocks for January 2000 was 10.4 million barrels, leaving U.S. inventories at 281.2 million barrels, coming close to the August 1976 low of 277.3 million barrels.
The Department of Energy’s Energy Information Administration predicted the world’s crude oil production and demand through the year 2020 with its Annual Energy Outlook 2000 report.
The 2000 report’s estimates of current and short-term increases in world crude oil prices are higher than projected in the 1999 report due to unexpected, rapid economic recovery in East Asia and the March 1999 agreement by OPEC and four non-OPEC countries to cut oil production. Over the next several years crude oil prices are expected to rise about $7 per barrel from the average world price of $12.10 (all prices are in 1998 dollars). The latest estimate for crude oil price-per-barrel for 2020 is less than the estimate made in 1999. Also contributing to lower long-term estimates are the projected economic growth for the Pacific Rim region and higher projected non-OPEC oil projection due to technology improvements. The current price estimate for 2020 is $22.99.