As the U. S. and China do battle over trade, there’s one sector that has been largely left out of the tit-for-tat for now — and that’s energy.
As the U. S. and China do battle over trade, there’s one sector that has been largely left out of the tit-for-tat for now — and that’s energy.
The U. S. has plenty, and China wants more. China laid claim to 20 percent of U. S. oil exports last year and importantly, as the fastest growing importer of liquified natural gas in the world, it is a ready importer of U. S. LNG.
In fact, if not for the boom in U. S. energy production over the last decade, the U. S. trade deficit would have been larger by as much as $400 billion or more.
« The best way in my view to cut the trade deficit is to increase exports…whether it’s LNG or cars or aluminum or whatever, » said U. S. Commerce Secretary Wilbur Ross, in a recent interview with CNBC.com.
On a pure dollar basis, the deficit in petroleum and related products has shrunk to $46 billion in the fourth quarter of last year, just about a tenth of the peak deficit of $451.9 billion in the third quarter of 2008, according to Mark Zandi, chief economist at Moody’s Analytics.
While the figures don’t break out the fluctuation in oil prices, they do underscore the fact that the U. S. oil and gas sectors have boomed — using new technologies to find and drill oil and gas at a pace that should someday make the U. S. not only the largest gas producer but the largest oil producer in the world.
« If you look at the trade deficit, it’s basically unchanged, but if you look underneath, there’s been this dramatic decline in the petroleum trade deficit, » said Zandi. « If the trade deficit in petroleum and products remained unchanged at their 2007 level, GDP would be 1.1 percent lower today. »
Service sector growth has also been substantial, but no goods producers compare to the gains made by energy in holding down the trade deficit.
« It may be the single most important event of the last decade, not only on economic levels, but political levels, » said Zandi of U. S. energy sector growth. « It’s such an amazing story of the success of the market and technology.
