Drilling Down On The Trade Deficit

IBD Editorials ^ | December 11, 2008

[Kaslin]

Energy: The U.S. trade gap widened a surprising 7% in October to $57.2 billion. Why? Despite lower prices, oil imports rose $1.1 billion, another sign of our continued dependence on foreign supplies. But there's a solution.

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It seems funny to talk about a $1 trillion taxpayer- and debt-funded "stimulus" plan when there's something we could do right away to boost the economy, create hundreds of thousands of jobs, shrink our trade gap and secure our energy independence: Drill for oil here, and drill for it now.

October's trade data tell why. Despite a record plunge in oil prices from the late summer and into fall, the actual volume of oil we imported went up. Oil still accounts for nearly half our trade deficit (see chart) compared with less than 30% two years ago.

We still spend hundreds of billions each year to buy oil from abroad because we produce less and less of our own energy with each passing day. That leaves us vulnerable to petrotyrants — including Russia's Vladimir Putin, Iran's Mahmoud Ahmadinejad and Venezuela's Hugo Chavez — who would do us ill, using their oil wealth as a weapon against the U.S. and the West.

Worse, at the peak of the oil-price spike, we were spending nearly $700 billion a year on foreign oil — an amount equal to the massive U.S. financial bailout passed last summer.

It's not like we don't have oil ourselves; in fact, we're drowning in the stuff. But we've been told for years we can't drill for it because it might spoil the wilderness or add to global warming.

[1rudeboy]

I’m too tired to point out the obvious to the rest of our friends.

[LowCountryJoe]

There are two market pressures that can cause a trade deficit: foreigners purchasing U.S. assets and more importation than exportation. Funny thing is, no matter what is causing the pressure, both these things happen in unison. In other words, the direction of the pressure makes no difference, if we're importing less than we export, foreigners are purchasing our assets. This is an inflow of capital and, until recently, Americans were leveraging this inflow of capital to create even more wealth.

Trade deficits are not inherently bad -- in fact, we're probably better off in trade deficit mode. It the budget deficit that's the real problem...but you rarely hear the 'fair traders' talk about spending cuts.

[4Speed]

Federal OIL Lease Sales....IF they had taken place 6 MONTHS AGO would have Brought in BIG $$$$s when OIL was over 100 a Barrel.

NOW, since CONGESS DID NOT ACT, they will go CHEAPER.......anyone talking about this MISTAKE of a Group of people that want to give Money away, instead of making it when they (Congress) should be Making it.

DUH, Drill where there is OIL, Not where Pelosi and company think they ought to drill.