Oil and the Trade Deficit

I had the opportunity to listen in on a conference call with Republican Leader, my Congressman and a Great American -- John Boehner -- and one of the participants asked a very good question regarding oil and the trade deficit. A quick search turned up some very telling information from 2006 that I can only imagine has gotten worse since then.

Here is Economist's View:

Has the increase in oil prices affected the U.S. trade deficit?

Figure 1 plots monthly data from January 2002 to July 2006 for both the overall trade balance and the petroleum-related trade balance; the latter includes imports and exports of crude oil, fuel oil, liquefied petroleum gases, and other petroleum products.



It shows that the overall monthly trade deficit went from $30 billion to $68 billion, and the petroleum-related trade deficit went from $6 billion to $26 billion. These numbers imply that higher oil prices and the resulting higher cost of petroleum imports have accounted for over 50% of the deterioration in the overall U.S. trade deficit during this period. Indeed, looking at only the last two years, from August 2004 to July 2006, the data are more striking. The overall trade deficit grew from $54 billion to $68 billion and the petroleum-related trade deficit rose from $14 billion to $26 billion, indicating that the deterioration in the petroleum-related trade deficit accounts for 80% of the worsening in the overall trade deficit.

Seriously, read the whole thing...

Now I will eagerly step aside for someone more knowledgeable in such things than I, but I think the trade deficit issue is another argument for increasing the domestic supply of oil. And, I think Democrats might actually be moved by this one because there has got to be a way to make this about labor unions...