Growing U.S. oil and gas production and lower oil prices have reshaped U.S. petroleum trade. Although the United States still runs a deficit, the average monthly trade deficit through August 2015 is only $7.6 billion, compared to $35.1 billion through August 2008. This improvement is largely driven by imports. In 2008 through August, U.S. petroleum imports averaged $41.3 billion per month. By 2015, petroleum imports had declined to $16.3 billion per month. Despite lower unit values in 2015, U.S. exports have increased as the impact of higher export volumes more than offset the decline in price. Through August 2015, U.S. petroleum exports averaged $8.7 billion per month, compared to $6.2 billion per month during the same period in 2014.
As shown in the figure below, the petroleum trade deficit (excluding adjustments 1/) has shrunk by nearly $72 billion through August 2015 compared to last year. In contrast, the deficit in non-petroleum trade has expanded by nearly $81 billion relative to last year due to a combination of rising imports (+$5.9 bil./ mo.) and shrinking exports (-4.3 bil./mo.).Source: U.S. Bureau of the Census, FT900, various issues.
The increase in the non-petroleum deficit has been driven by slowing oversees growth, which not only leads to lower U.S. exports, but also to higher imports as foreign producers tend to increase their reliance on the U.S. market. The figure below shows that deterioration has occurred in all but one major end use category, industrial supplies, which contains petroleum.Source: U.S. Bureau of the Census, FT900, August 2015.
Lower oil and gas prices globally have slowed the breakneck pace of U.S. investments in petroleum production. As a result, the shift toward balanced petroleum trade may be taking a pause. In contrast, the non-petroleum deficit continues to expand. Thus far, the trend toward “in-sourcing” has had a much more modest effect on trade flows than the fracking technology that unleashed the boom in U.S. petroleum production.
- 1/ Reflects seasonal and other adjustments made by the Census Bureau.