Big news from the Commerce Department this week is that U.S. exports rose to a new high in 2013 and imports dropped to their lowest level since 2009 for the smallest U.S. trade deficit since 2009 – thanks largely to reduced oil imports due to growing domestic production and record exports of products made from petroleum. The Wall Street Journal (subscription required) reports:
A booming domestic energy industry is largely responsible for the turnaround. Not adjusted for inflation, the value of petroleum exports—a category that includes gasoline, kerosene, lubricants, solvents and other products—reached a full-year peak in 2013. Petroleum imports, by value, were the lowest since 2010 and the volume of crude-oil imports, at 2.8 billion barrels, were the lowest since 1995.
Bloomberg reports the U.S. trade gap narrowed to $471.5 billion last year from $534.7 billion in 2012, with the trade balance on petroleum products shrinking to 20.2 percent, the biggest decline in four years.
The Journal notes that new technologies – including advanced horizontal drilling and hydraulic fracturing – are letting companies develop oil and natural gas from vast U.S. shale reserves. Oil output rose 30 percent between 2011 and 2013 to nearly 7.4 million barrels per day (mbd), according to the U.S. Energy Information Administration, which projects output will near 9.6 mbd, a historic high, in 2016. The Journal:
“It’s momentous,” Citigroup analyst Eric Lee said. “This is a continuing trend that we can keep seeing in the very dramatic way. The less pull the U.S. has on global oil supply, it lowers world prices.” At the Port of Corpus Christi in Texas, outbound petroleum shipments are up about 45% from a year earlier. “Nobody saw this three or four years ago,” said John LaRue, the port’s executive director. “The last three years have been transformational. We’ve had as much activity just in the port in an 18-month period as we had in the previous 15 years combined.”
While few saw the U.S. energy renaissance coming, it’s not hard to see where it could go. With increased access to domestic reserves, policies that encourage safe and responsible development and lifting restrictions on U.S. energy exports, the trade picture could improve even more. More U.S. energy exports – just like the export of other valuable commodities – will bring more overseas wealth to this country while boosting domestic production.
But we have to choose the right energy policies to make it so. A new report by the Center for a New American Security says that restrictions on U.S. energy exports will make America less secure:
As the United States imports less energy, some policy leaders hope that a push toward energy isolationism will insulate the country from instability in the global energy market. Such hopes are unfounded. Hoarding energy at home, neglecting bilateral relationships with major global energy players and forfeiting economic opportunities to export energy would leave the United States less secure. … Instead, the United States should accept the reality of energy interdependence, take steps to decrease domestic consumption and diversify supplies, facilitate broader energy exports and more deeply and creatively integrate energy security into strategic policy and military planning.
This will require the right choices on energy, American energy, going forward. Thanks to the domestic energy revolution, the United States is a global energy superpower. The question is whether we will build on recent successes or let opportunity pass by. API President and CEO Jack Gerard asked it this way in his State of American Energy speech last month:
“Do we more fully develop our enormous energy resources so that future generations inherit an energy self-sufficient nation that’s THE world’s leader in energy production? Or do we take a step back to a time when America was but one of many players on the world energy market?”
The new trade figures detailed above show where we’ve been and help point the way – a way that looks increasingly bright if we choose American energy.
By Mark Green
Originally posted February 7th, 2014
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