U.S. Liquid Fuels Consumption. Projected total U.S. liquid fuels consumption in 2011 falls by 260 thousand bbl/d (1.4 percent) from 2010. Motor gasoline consumption accounts for most of the projected decline for the year, shrinking by 230 thousand bbl/d (2.6 percent). EIA expects total liquid fuels consumption to increase by 120 thousand bbl/d (0.6 percent) to 19.0 million bbl/d in 2012.

U.S. Liquid Fuels Supply and Imports. Domestic crude oil production increased by 110 thousand bbl/d in 2010 to 5.5 million bbl/d. Projected production increases by roughly 200 thousand bbl/d in 2011 and by a similar amount in 2012. This rising trend in production is driven by increased oil‐directed drilling activity, particularly in on‐shore shale formations. The number of on‐shore oil‐directed drilling rigs reported by Baker Hughes increased from 768 at the beginning of 2011 to 1,113 on December 2, 2011.

EIA expects that the United States will be a net exporter of petroleum products in 2011 for the first time since 1949 with gross product exports averaging 0.3 million bbl/d more than gross product imports (product exports averaged as much as 2.5 million barrels per day less than gross imports in 2005). EIA expects that the United States will remain a net product exporter of about 0.2 million barrels per day in 2012.

The share of total U.S. consumption met by liquid fuel net imports (including both crude oil and refined products), which has been falling since 2005, is expected to be 45 percent in 2011 and 46 percent in 2012. The 220 thousand bbl/d drawdown in commercial and government stocks in 2011, which contributed to lower imports, is reversed in 2012 with stocks rising by an average 40 thousand bbl/d.

U.S. Crude Oil and Petroleum Product Inventories. Distillate fuel oil stocks fell by 24 million barrels between Sep. 30, 2011 and Nov. 18, 2011. Distillate fuel inventory at the end of November 2011 was an estimated 139 million barrels, 23 million barrels lower than at the same time last year and 10 million barrels below the average for that month between 2006 and 2010. Total motor gasoline stocks at the end of November 2011 were an estimated 211 million barrels, down 2 million barrels from last year but 2 million barrels higher than the previous 5‐year average for that month. Projected total distillate and motor gasoline inventories at the end of 2012 are expected to average about 2 million barrels lower and 3 million barrels higher, respectively, than their previous 5‐year averages.

Commercial crude oil inventory levels ended November 2011 at an estimated 334 million barrels, 18 million barrels below last year but 5 million barrels above the previous 5‐year average for that month. Projected commercial crude oil stocks end 2012 at 320 million barrels, about 4 million barrels above the previous 5‐year average.

U.S. Petroleum Product Prices. EIA forecasts that the annual average regular‐grade gasoline retail price, which was $2.78 per gallon in 2010, will be $3.53 per gallon in 2011 and $3.45 per gallon in 2012. The higher retail price in 2011 reflects not only the higher cost of crude oil but also changes in the average U.S. refinery gasoline margin (the difference between refinery wholesale gasoline prices and the average cost of crude oil), which increases from $0.34 per gallon in 2010 to $0.47 per gallon in 2011, then declines to $0.35 per gallon in 2012.

EIA expects that on‐highway diesel fuel retail prices, which averaged $2.99 per gallon in 2010, will average $3.85 per gallon in both 2011 and 2012.

Between 1990 and 2004 annual average wholesale gasoline prices ranged from 5 cents per gallon to 11 cents per gallon above wholesale diesel prices. Beginning in 2005, wholesale gasoline prices fell below wholesale diesel fuel prices in all years except 2009 as world demand growth for diesel fuel, primarily in the emerging economies, outpaced gasoline demand growth. In 2010 gasoline prices fell below wholesale diesel prices again as world demand growth for diesel fuel picked up. EIA expects the gasoline wholesale price to weaken further relative to diesel prices, averaging 17 cents per gallon below diesel in 2011 and 22 cents per gallon below diesel in 2012.