The Trade Deficit Swells … Again!

America is getting even more dependent on foreign suppliers for the goods and services that it wants to consume. Here today’s the press release from the government: Latest International Trade in Goods and Services News Release

This is all self explanatory, so I won’t dwell on it much, but the petroleum account is worth mentioning.

Buried in the details of the report is this nugget: in January 2004 the U.S. imported $12.586 billion’s worth of petroleum products. By December 2005 imports has swollen to $23.612 billion. That’s a phenomenal increase and just goes to show how much the American economy is dependent on overseas energy sources. Interestingly, America also exports petroleum products: $1.0 billion’s worth in January 2004, and $ 1.766 billion’s worth in December 2005. [For those of you who are technically minded all these numbers are seasonally adjusted: the raw figures are slightly lower].

Behind these aggregates are some interesting satistics: the actual amount of oil imported, expressed as barrels, rose only slightly from 309,876 to 311,484. That’s the good news. Obviously that bad news is that the average price per barrel rose from $28.57 in January 2004 to $49.76 per barrel in December 2005.

Clearly, America’s foreign oil dependency is increasing at an alarming rate, and won’t go away quickly without some politically difficult decisions being made. The nation’s vulnerablity to oil price shocks has increased, not diminished, in the 30 odd years since the first oil crisis. We still don’t have an energy policy worth a lick, and this neglect has aggravated our expsoure to prices. It’s time to fix the problem.

For all the President’s bold statements about our “oil addiction” in his State of the Union Address I see no policy prescriptions emerging from the White House sufficient to deal with this imbalance. On the contrary, the Cheney energy policy review, which was notoriously conducted in secret and with the input of the big oil companies, appears to have concluded that oil deficits don’t matter. [Cheney seems to have a fixation about deficits not mattering since that’s also his view of the Federal deficit!]

This administration just doesn’t have the will to impose a gas tax and hike fuel efficiency, which are the best ways of curtailing use. We need both, and we need them now.