WASHINGTON, D.C. --- Higher oil prices, arising from tight global crude oil markets and Gulf Coast hurricane damage, led to lower U.S. demand and record product imports in 2005, the American Petroleum Institute (API) reported in its monthly statistical report. “Growth in gasoline demand slowed to a fraction of the rate that it had averaged during the previous three years,” observed Ronald J. Planting, APR's manager of information and analysis. The major hurricanes that slammed the Gulf Coast in late August and September continued to have lingering effects even at year-end, Planting said. The supply impact of the two unprecedented hurricanes, combined with increased fuel demand over the Labor Day weekend, led to record prices, said Dr. John Felmy, API chief economist and director of statistics. “While the industry has succeeded in restoring much of the damaged assets to full production, some remain offline as repairs are made,” Felmy said. He noted that restoration of production has moved as rapidly as is possible given the need to restore operations only when certain that the environment will not be adversely affected. This year will continue to present challenges to the industry, Felmy said, noting the upcoming requirement for ethanol use in gasoline starting in May, and the introduction of ultra-low sulfur diesel fuel on June 1. The API Monthly Statistical Report for December, which includes supply and demand statistics for the year 2005, showed that offshore production of oil and natural gas was still operating at substantially below pre-hurricane rates, and refinery output still lagged year-ago levels as several refineries remained less than fully operational. Significantly higher gasoline prices in 2005 partially offset the effects of a strong economy, and gasoline deliveries, a key measure of demand, rose only 0.4 percent for the year, API reported. That's a noticeable contrast with growth in the previous three years, which averaged nearly 2 percent annually. Highway diesel demand continued to rise in 2005, API reported. But because of a partially offsetting decline for the rest of the distillate fuel oil market, deliveries of distillate fuel oil overall rose just 0.8 percent. Industrial and utility users seeking alternatives to tight supplies of natural gas helped propel residual fuel oil deliveries 6.6 percent higher, API reported. But jet fuel deliveries declined and hurricane disruptions of Gulf Coast gas processing and petrochemical industries led to a drop in petrochemical feedstock use. The net result was a decline in overall U.S. petroleum deliveries of 0.6 percent for the year, their first annual drop in four years. Even with substantial recovery in refinery operations over the last several months, API said refinery inputs, an overall measure of activity at refineries, were still down nearly 5 percent from a year ago. By contrast, during the first half of 2005, inputs had surpassed year-ago levels by an average 1.4 percent compared with the same period a year earlier, setting an all-time high of 15.84 million barrels per day. At year-end, roughly 1 million barrels per day of hurricane-affected U.S. refinery capacity had still not returned to normal operations. Inputs for the year as a whole, down 2 percent, showed the first annual decline in three years. Product imports surged nearly 14 percent in 2005 to an all-time high of 3.48 million barrels per day. Product imports' share of domestic consumption also reached an all-time high of close to 17 percent, API reported.   Growth for gasoline imports was especially strong, rising more than 20 percent to exceed 1 million barrels per day for the first year ever.  Gasoline imports, including blending components, accounted for more than 12 percent of all gasoline used in the United States in 2005.  Residual fuel imports also surged nearly 25 percent to 531,000 barrels per day. But with tight world markets for distillate fuel oil, imports of that product barely held steady, despite strong U.S. demand for diesel.  Crude oil imports slipped marginally for the year. But because of the jump in product imports, overall U.S. imports rose 2.6 percent to 13.49 million barrels per day. U.S. imports of crude and products in 2005 amounted to about 65 percent of domestic consumption. Domestic crude production in December posted its third consecutive monthly increase, API reported, as Gulf producers continued to recover from the impacts of the devastating hurricane season. U.S. crude production for the year, however, saw its largest annual percentage decrease since 1949 -- a drop of 6.6 percent -- because the equivalent of about 7.5 percent of crude production in the lower 48 states went unproduced. This was the result of precautionary shut-ins and equipment damage. Crude oil inventories remained above the corresponding five-year average for nearly every month in 2005. They ended the year at 320 million barrels ---12 percent above a year earlier and a similar percentage above the five-year average for December. Distillate inventories, at 135 million barrels, finished the year more than 7 percent ahead of a year earlier. But gasoline inventories were 5 percent lower than their five-year December average, at 207 million barrels.