'U.S. Oil Imports, Policies And Tanker Shipping'

U.S. domestic crude oil and natural gas liquids production peaked in 1970, and after remaining nearly constant for the following two years, fell steadily until 1976, with output from Alaska providing an upsurge in 1977. However, even in 1977, production estimated at 466 million tons was up by only 5 million tons from the previous year, and down by some 60 million tons from the years of peak production.

U.S. oil consumption has not declined, or even remained static during the 1970s. In consequence, U.S. oil imports have grown from some 200 million tons in 1971 to some 430 million tons in 1977.

The growth of U.S. seaborne oil imports has been a major generator of world tanker demand during the past seven years.

"U.S. Oil Imports, Policies and Tanker Shipping," Study Number 66 in a series produced by the Research Division of H.P. Drewry (Shipping Consultants) Limited, provides a detailed analysis of developments in U.S. oil imports since 1970 and the related development of tanker demand to serve the U.S. trades. The analysis shows that there has been a distinct difference in the development of crude oil imports/crude oil tanker demand, and the trend of refined products trades/products tanker demand. Thus, between 1970 and 1977, U.S. seaborne crude oil imports increased by nearly fivefold to some 310 million tons, while conversely U.S.

domestic seaborne crude oil movements fell from 40 million tons to 17 million tons (reflecting the shortage of domestic crude availability and the decline in movements from the U.S. Gulf to the Eastern Seaboard). During this same period, both the seaborne imports of refined products, and their domestic coastwise trade was constant overall, varying from year to year between 90 and 140 and 54 and 63 million tons, respectively.

In terms of tanker demand, the above figures indicate that the tanker requirement to transport U.S. crude oil imports increased from some 4 million deadweight tons in 1970 to 46 million dwt in 1977, with domestic crude oil tanker demand of another 1-2 million dwt and with total products carrier demand in the range of 8 to 11 million dwt throughout.

The growth in tanker demand generated by crude imports arises not only from the larger volumes mentioned above, but also from the increased imports of medium/ long-haul crude oils from North and West Africa and the Middle East that has occurred as crude availability in the Caribbean, the traditional source of U.S. imports, has peaked. In the global context, the total tanker demand generated by U.S. trades appears to have risen from some 11 percent of total world demand in 1972 to about 27.5 percent in 1977, with a remarkably large increase in relative share between 1976 (22 percent) and 1977 — indeed, it appears that tanker demand resulting from non-U.S. trades probably fell in 1977 (reflecting low demand growth for oil and the advent of new crude supplies, such as the North Sea, located close to major centers of demand).

From these comments, it is evident that future developments in U.S. oil import requirements could be critical to the development of the worldwide tanker industry.

Between now and 1985, U.S. crude oil imports (ex. domestic trades and movements from Alaska) are seen as reaching a peak of some 350 million tons/ year in the early 1980s and declining thereafter to some 280 million tons by 1985, as new supplies of crude become available from the "lower 48." On the other hand, the imports of refined products by the U.S. are forecast to increase rapidly after 1980 (from 240 million tons in 1980 to 420 million tons in 1985), reflecting the development of a shortage of refinery capacity in the U.S. Overall, the U.S. is seen as requiring about one-third of all the volume of oil and products moved by sea during the period 1980-85 (up from some 28 percent in 1977).

In terms of tanker demand, the fleet needed to t r a n s p o r t U.S.

crude trades is projected to be some 52 million dwt in 1980, and some 38 million dwt in 1985. The products carrier demand is seen as doubling from 9 million dwt in 1977 to 18 million dwt in 1980, and then increasing to 40 million dwt by 1985. It is evident that this change in the structure of U.S. generated tanker demand could have a profound effect on the tanker market worldwide.

It has frequently been suggested that U.S.-flag tankers should be guaranteed a share of the tanker demand generated by U.S. oil imports. An examination of the supply of U.S.-flag tankers indicates that this fleet was some 11.5 million dwt at the end of 1977, and is likely to peak at some 15 million dwt in 1980 but remain above 14 million dwt up to 1985.

In terms of the tanker demand arising as a result of forecast U.S. oil imports levels, this fleet represents between 18 percent and 21 percent of the total (but these figures do not show separately U.S. coastal trades already r e s e r v e d to U.S.-flag tonnage).

However, if tankers owned or held on long-term charter by U.S. companies operating under non-U.S.

flags are taken into account, it is found that only in 1985 is there a deficit of U.S.-controlled tonnage in relation to U.S.-generated tanker demand. Thus, given the introduction of some form of U.S.

oil cargo preference, it seems certain that there will be immediate pressure for the re-registration of non-U.S.-flag U.S.-owned tankers under U.S. flag.

"U.S. Oil Imports, Policies and Tanker Shipping," No. 66 in a series of reports on various aspects of shipping prepared by the Research Division of HPD Shipping Publications, 34 B r o o k Street, Mayfair, London W1Y 2LL, England, is available at a single copy rate of U.S. $85 (all overseas orders) or £35 (U.K. only), or on a subscription basis U.S. $325 (all overseas orders) or £135 (U.K.

only) for the series 61-70.

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