A surfeit of domestically-sourced crude is having a profound effect on the American trade balance, according to figures for 2014 just released. The WSJ reports:
Petroleum imports accounted for less than 20% of the nation’s trade deficit last year, down from more than 40% only five years earlier, according to figures for 2014 released Thursday.But the overall U.S. appetite for overseas goods didn’t diminish over the period, which started with the global economy’s first full year of expansion after the 2007-09 recession. Imports of just about everything else have surged as Americans substitute other goods for foreign oil, leaving a growing trade deficit.“If we hadn’t had this oil boom I think our deficit would be lot larger than it is right now,” said IHS Global Insight economist Patrick Newport. “It’s a game-changer.”
Our trade deficit increased last year in no small part due to a strengthening dollar, making imports relatively cheaper and exports less competitive abroad. That’s not great news for the U.S. economy, but it could be a whole lot worse, if not for shale.The more oil we produce at home, the fewer petroleum products we need to import from abroad, and that’s undoubtedly a boon both for the American economy and for our energy security. Hail shale!