Full Title: U.S. Trade Deficit and the Impact of Changing Oil Prices
Author(s): James K. Jackson
Publisher(s): Congressional Research Service
Publication Date: February 1, 2011
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Description (excerpt):
Petroleum prices rose sharply in the first half of 2008, at one time reaching more than $140 per barrel of crude oil. After July 2008, however, petroleum prices and import volumes fell at a historically rapid pace; in January 2009, prices of crude oil fell below $40 per barrel. Since then, crude oil prices have more than doubled, while the average monthly volume of imports of energy-related petroleum products has risen slightly, year over year, reflecting the positive, albeit slow, growth in the rate of economic activity. In addition to the slight rise in the volume of crude oil imports, the rise in the cost of energy imports in 2010 added about $80 billion to the nation’s trade deficit in 2010 over that experienced in 2009. Turmoil in the Middle East caused petroleum prices to rise sharply in the first two months of 2011 and could add $100 billion to the U.S. trade deficit in 2011. The increase in energy import prices is pushing up the price of energy to consumers and could spur some elements of the public to pressure the 112th Congress to provide relief to households that are struggling to meet their current expenses. With oil prices rising to over $100 per barrel in early 2011, the International Energy Agency cautioned that the rising price of oil was becoming a threat to the global economic recovery. This report provides an estimate of the initial impact of the changing oil prices on the nation’s merchandise trade deficit.