The year’s higher volume of gasoline deliveries was, in effect, met entirely by a substantial jump in the blending of ethanol into gasoline, according to the organization.

Ethanol use in gasoline rose by more than 1 billion gallons, or nearly 35 percent, to an estimated 5.4 billion gallons in 2006. More than 40 percent of all gasoline consumed in the US now includes some percentage of ethanol.

The API noted that with the rapid drop in retail prices later in the year, the second half’s growth in gasoline deliveries strengthened compared with the first.

By the fourth quarter, the new ultra low-sulfur diesel accounted for most of the fuel used by on-highway diesel trucks and for about one-fifth of all US highway fuel.

Overall, US refineries and blenders produced record amounts of gasoline and distillate fuel oil in 2006, with output of gasoline rising nearly 2% and distillate, 2.7%. Refinery capacity expanded for the tenth year in a row, averaging nearly 17.4 million barrels per day.

Since 1996, refiners have expanded capacity by more than 2 million barrels per day, or 14%. Total petroleum imports, reflecting the year’s decline in demand, fell slightly short of the prior year’s at 13.6 million barrels per day.

While crude oil imports edged up 0.5% for the year, product imports dropped 1.9% from 2005’s record high. Overall, imports of crude oil and products accounted for 66 percent of domestic petroleum use for the year.

US crude oil production slipped 1.1% in 2006 because of a sharp, 12.1% decline in Alaska. Lower 48 output, however, saw its first increase in six years, which included not just recovery on the Gulf Coast following 2005’s hurricanes, but new production elsewhere in the US.

API data show that 2006 oil well completions were the highest in eighteen years, and natural gas completions reached an all-time high. Crude oil inventories ended the year at 318 million barrels, down about 2% from 2005’s eleven-year peak, but still well above the recent five-year average.

With the mild winter weather so far this season, distillate inventories remained high at 6.5 percent above a year ago. Gasoline inventories rebounded by more than 10 million barrels during December to 211.6 million barrels, about 1.6 percent higher than a year earlier.