U.S. Trade Deficit and the Impact of
Changing Oil Prices
James K. Jackson
Specialist in International Trade and Finance
March 14, 2014June 1, 2015
Congressional Research Service
7-5700
www.crs.gov
RS22204
U.S. Trade Deficit and the Impact of Changing Oil Prices
Summary
Imported petroleum prices fell from an average price of $10291.23 per barrel of crude oil in September
2013 to 2014 to
an average price of $91 per barrel in December 2013 and $90 per barrel in January 2014.
Although this is far below the $140 per barrel price reached in 2008, the cost of energy is one
among a number of factors that likely restrained the rate of growth in the economy through much
of 2013. The average price of an imported barrel of crude oil in the September-December 2013
period fell 10% during the period and average prices for the year were 4% below the average
price per barrel in 2012. Similarly, the volume of oil imports in 2013, or the amount of oil
imported, decreased by 10% from 2012. As a result, the value of imported crude oil in 2013 fell
nearly 13% from the value in 201246.47 per barrel in March 2015, or a drop of 45%. This represents the lowest
price per barrel of crude oil since early 2009, when the global economy was slowing sharply. For
a short time in 2009, the average price per barrel dropped below $40. The average price of an
imported barrel of crude oil in 2014 fell 6% from the average price in 2013. Similarly, the volume
of crude oil imports in the first three months of 2015 fell by 7.6% from the same period in 2014.
The sharp decline in the average price of a barrel of crude oil combined with the drop in the
amount, or the volume, of oil imports in the January-March period in 2015 compared with the
same period in 2014 resulted in a drop of 48% in the value of imported crude oil and a sharp drop
in the share of the total U.S. merchandise trade deficit that is associated with the trade deficit in
energy imports.
In general, market demand for oil remains highly resistant to changes in oil prices and reflects the
unique nature of the demand for energy-related imports. Turmoil in the Middle East wasis an
important factor that causedcontinues to create uncertainty in global petroleum markets and was one of
the most important factors in causing petroleum prices to rise sharply in early 2011 and in 2012. Although
Although prices for imported crude oil fluctuated somewhat throughout 2011, they averaged 30% higher
higher than in 2010 and added about $100 billion to the total U.S. trade deficit in 2011. Energy import
import prices in 2013 averaged 4% lower than they were in 2012, pushing down the price of
energy to
consumers by the end of the year. During the same period, the total volume of
petroleum products
imported by the United States in 2013 fell below that imported in 2012,
reducing the overall cost
of imported energy to the economy and the overall trade deficit. Oil futures markets in March
2014 indicated that oil traders expect crude oil prices to trend around $85 per barrel by August
2014. During periods when oil prices have spiked above $100 per barrel, some elements of the
public pressured Congress to provide relief to households that are struggling to meet their current
expenses. This report provides an estimate of the initial impact of the changing oil prices on the
In 2014,
both the price of imported oil and the amount, or volume, of imported oil fell, reducing the share
of the energy trade deficit in the total U.S. merchandise trade deficit. Through the first quarter of
2015, crude oil import prices averaged slightly less than $52 per barrel. Oil futures markets in
May 2015 indicate that oil traders expect crude oil prices to trend slowly upward through the end
of 2015 and into 2016 to around $58-$60 dollars a barrel. This report provides an estimate of the
initial impact of the changing oil prices on the nation’s merchandise trade balance.
Congressional Research Service
U.S. Trade Deficit and the Impact of Changing Oil Prices
Contents
Background ...................................................................................................................................... 1
Recent Trends .................................................................................................................................. 3
Oil Import Volumes ................................................................................................................... 4
Oil Import Values....................................................................................................................... 5
Oil Import Prices ....................................................................................................................... 7
Issues for Congress .......................................................................................................................... 9
Figures
Figure 1. Energy Trade Deficit as a Share of Total U.S. Merchandise Trade Deficit ...................... 2
Figure 2. Quantity of U.S. Imports of Energy-Related Petroleum Products.................................... 45
Figure 23. Value of U.S. Imports of Energy-Related Petroleum Products ........................................ 57
Figure 34. U.S. Import Price of Crude Oil......................................................................................... 78
Figure 45. Quantity, Value, and Price of Imported Crude Oil
by the United States, 1973-20132014 ................................................................................................... 89
Tables
Table 1. Summary Data of U.S. Imports of Energy-Related Petroleum Products, Including
Oil (not seasonally adjusted) ........................................................................................................ 34
Table 2. U.S. Imports of Energy-Related Petroleum Products, Including Crude Oil (not
seasonally adjusted) ...................................................................................................................... 56
Contacts
Author Contact Information........................................................................................................... 1011
Congressional Research Service
U.S. Trade Deficit and the Impact of Changing Oil Prices
Background
According to data published by the U.S. Census Bureau of the U.S. Department of Commerce,1
the the
average price of imported petroleum products in 2012 rose 1% over the same period in 2011
to reach an average price of $101.07 per barrel. In 2008, petroleum prices reached nearly $140
per barrel, before falling at a historic rate.2 Generally, petroleum prices rise during the winter and
spring months and then decline in the fall. Following the economic recession in 2009, however,
has fluctuated sharply over the past four to five
years. Generally, petroleum prices rise during the winter and spring months and then decline in
the fall. In 2008, prior to the financial collapse, the average imported petroleum prices reached
nearly $140 per barrel, before falling at a historic rate.2 During the economic recession in 2009,
however, average petroleum prices fell each month between August 2008 and February 2009, but then
then reversed course and rose by 85% between February and December 2009, climbing to nearly
$80
per barrel at times. In 2010, imported petroleum prices reached a peak average price of about
$77 per barrel
in April before falling to around $72 per barrel in July 2010. In December 2010, as
the pace of
economic growth increased, imported petroleum prices averaged nearly $80 per barrel and
and continued to increase, reaching over $112 per barrel at times in March, April, and May 2011.
Petroleum import prices rose in 2012 to peak at an average monthly price of $110 per barrel in
April before falling to an average price of $95 per barrel in December 2012. In 2013, oil prices
averaged around $97 per barrel, about 4% below the average price in 2012. In January 2014,
imported oil prices averaged $90 per barrel. Imported energy products, primarily crude oil,
In 2012, the average price of imported petroleum rose 1% over the same period in 2011 to reach
an average price of $101.07 per barrel. In 2013, oil prices averaged around $97 per barrel, falling
to an average monthly price of about $91 per barrel in 2014. Imported energy products, primarily
crude oil, account for about one-fourth of the total annual U.S. energy consumption, measured in
btus.3
Oil futures markets in March 2014May 2015 indicated that oil traders expected crude oil prices to trend
around $85 per barrel by August 2014slightly upward through 2015 and into 2016 from the average of $51 per barrel in the first quarter
of 2015 to a range of $58-$60 per barrel by late spring 2016. Turmoil in the Middle East, natural
disasters, hurricanes,
and droughts, however, could have a significant the rate of economic growth in Asia and Europe, and the impact of
low oil prices on U.S. investment and production of petroleum and natural gas—the United States
is now the world’s largest combined producer of oil and natural gas—could have a significant
impact on the course of oil prices for the
foreseeable future. As a result of changing petroleum
prices, the price changes in imported
energy-related petroleum products worsened the U.S. trade
deficit in 2006-2008 and 2010-2011.4
Oil prices in 2013 averaged less than those in 2012;
combined with a decline in the volume of oil
imported, this resulted in a decline in the role of
energy imports in the nation’s trade deficit from 40%
of the overall deficit in 2012 to 33% in 2013. If the trends set in 2013 and January 2014 continue
through 2014, lower crude oil prices combined with a lower quantity of imported crude oil could
reduce the overall U.S. trade deficit by $50 billion in 2014 from that recorded in 2013. Energyrelated
2013, as indicated in Figure 1. In March 2015, energy imports had dropped to account for 11% of
the total U.S. trade deficit, which stands as the lowest monthly share in over a decade.
If the first quarter 2015 trend persists through the end of the year, the nominal value of energyrelated petroleum products could fall by nearly half that of 2014. While the lower cost of energyrelated imports could reduce the share of energy in the total U.S. merchandise trade deficit, the
trade deficit itself reflects a number of different factors, each of which can affect the overall trade
deficit. Energy-related petroleum products is a term used by the U.S. Census Bureau that includes
crude oil,
petroleum preparations, and liquefied propane and butane gas. Crude oil comprises the largest
share by far within this broad category of energy-related imports.
In isolation from other events, lower energy prices tend to aid the U.S. economy by making it a
more attractive destination for foreign investment. Such capital inflows, however, place upward
pressure on the dollar against a broad range of other currencies. To the extent that the additions to
the merchandise trade deficit are returned to the U.S. economy as payment for additional U.S.
exports or to acquire such assets as securities or U.S. businesses, the U.S. trade deficit could be
mitigated further.
1
U.S. Department of Commerce, U.S. Census Bureau, Report FT900, U.S. International Trade in Goods and Services,
Table 17, March 7, 2014. The report and supporting tables are available at http://www.census.gov/foreign-trade/PressRelease/current_press_release/ftdpress.pdf.
2
For information about the causes of the run up in oil prices, see Hamilton, James, Causes and Consequences of the Oil
Shock of 2007-2008, Brookings Papers on Economic Activity, Spring 2009.
3
Monthly Energy Review, U.S. Energy Information Administration, February 2014, p. 3.
4
For additional information about U.S. oil imports, see out-of-print CRS Report R41765, U.S. Oil Imports: Context
and Considerations, by Neelesh Nerurkar, available upon request.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Summary data from the Census Bureau for the change in the volume, or quantity, of energyrelated petroleum imports and the change in the price, or the value, of those imports for 2013 and
2014 are presented in Table 1. The data indicate that during 2013, the United States imported
about 3.5 billion barrels of energy-related petroleum products, valued at $352 billion. On average,
energy-related imports for 2013 were down 7.7% in volume terms from the average amount in
2013 and cost 11% less than similar imports during 2012. These data demonstrate that U.S.
demand for oil imports responds slowly to changes in oil prices. According to various studies,
U.S. demand for oil is correlated more closely to U.S. per capita income than to changes in oil
prices.5 Data for 2013 indicate that with the average price per barrel of oil of around $101, U.S.
imported petroleum costs fell by $46 billion in 2013 from the amount recorded in 2012.
The data also indicate that in January 2014, the quantity of energy-related petroleum imports fell
by 4.7% compared with the comparable period in 2013; crude oil imports in January 2014 fell by
1.6% from January 2013. Compared with January 2013, the average value of energy-related
petroleum products imports fell by 8.2% in 2014, while the average value of crude oil imports fell
by 5.7%.
As Figure 1 shows, imports of energy-related petroleum products can vary sharply on a monthly
basis. In January 2014, imports of energy-related petroleum products averaged about 256 million
barrels per month, compared with an average of 261 million barrels per month in January 2013,
or a decrease of 1.6%.
5
largest share by far within this broad category of energy-related imports.
1
U.S. Department of Commerce, U.S. Census Bureau, Report FT900, U.S. International Trade in Goods and Services,
Table 17, May 5, 2015. The report and supporting tables are available at http://www.census.gov/foreign-trade/PressRelease/current_press_release/ftdpress.pdf.
2
For information about the causes of the run up in oil prices, see Hamilton, James, Causes and Consequences of the Oil
Shock of 2007-2008, Brookings Papers on Economic Activity, Spring 2009.
3
Monthly Energy Review, U.S. Energy Information Administration, May 2015, p. 3.
4
For additional information about U.S. oil imports, see out-of-print CRS Report R41765, U.S. Oil Imports: Context
and Considerations, by Neelesh Nerurkar, available upon request.
Congressional Research Service
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U.S. Trade Deficit and the Impact of Changing Oil Prices
In isolation from other events, lower energy prices tend to aid the U.S. economy by making it a
more attractive destination for foreign investment. Such capital inflows, however, place upward
pressure on the dollar against a broad range of other currencies. To the extent that the additions to
the merchandise trade deficit are returned to the U.S. economy as payment for additional U.S.
exports or to acquire such assets as securities or U.S. businesses, the U.S. trade deficit could be
mitigated further. Lower energy prices also are expected to aid consumers by increasing their real
incomes. How consumers respond to lower energy costs, however, is problematic. In 2014,
consumers reportedly responded to lower energy costs by increasing their saving and reducing
credit card debt. In addition, energy producers have tended to respond to lower energy prices by
curtailing new investments and by trimming payrolls.5
Figure 1. Energy Trade Deficit as a Share of Total U.S. Merchandise Trade Deficit
Source: Department of Commerce.
In 2011, the rise in oil prices, year over year, combined with a slight decrease in energy imports,
pushed up the overall value of U.S. energy imports, which accounted for 44% of the total U.S.
merchandise trade deficit. In 2012, the share of the U.S. trade deficit attributed to energy imports
on an annual basis was 40%; the share in December 2012 was 33%, down from 42% recorded in
December 2011. In 2013, the share of the U.S. trade deficit attributable to energy imports was at
33%, down from 40% in 2012.
5
Bureau of Economic analysis, National Income and Product Accounts, Gross Domestic Product: First Quarter 2015,
May 29, 2015.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Recent Trends
Summary data from the Census Bureau for the change in the volume, or quantity, of energyrelated petroleum imports and the change in the price, or the value, of those imports for 2014 and
2015 are presented in Table 1. The data indicate that during 2014, the United States imported
about 3.4 billion barrels of energy-related petroleum products, valued at $317 billion. On average,
energy-related imports for 2014 were down 4.7% in volume terms from the average amount in
2013 and cost 10% less than similar imports during 2013. In general, U.S. demand for oil imports
responds slowly to changes in oil prices. According to various studies, U.S. demand for oil is
correlated more closely to U.S. per capita income than to changes in oil prices.6 Data for 2014
indicate that with the average price per barrel of oil of around $91, the U.S. trade deficit in
petroleum fell by $44 billion in 2014 from the amount recorded in 2013.
6
Hamilton, Causes and Consequences of the Oil Shock of 2007-2008; World Economic Outlook, Chapter 3,
International Monetary Fund, April 2011. According to the IMF, for developed economies, a 10% increase in oil prices
is estimated to result in a 0.2% decrease in oil consumption, but a 10% increase in income leads to a 6.8% increase in
oil consumption.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Table 1. Summary Data of U.S. Imports of Energy-Related Petroleum Products,
Including Oil (not seasonally adjusted)
January
2013
2014-March
2014
2015
Quantity
(millions of
barrels)
Value ($
billions)
Quantity
(millions of barrels)
% change
2011 to
20122014 to
2015
Value ($ billions)
% change
2013 to
20142014 to
2015
Total energyrelated
petroleum
products
326865.8
$31.7
311.6
-4.7%
$29.1
-8.2%
Crude oil
260.7
$24.5
256.5
-1.6%
$23.1
-5.782.7
830.2
-4.1%
$45.3
-45.1%
Crude oil
694.1
$63.7
641.2
-7.6%
$33.2
-48.0%
January through December
2013
20142014
2015
(Actual values)
(Estimated values)
Quantity
(millions of
barrels)
Value ($
billions)
Quantity
(millions of barrels)
% change
2013 to
20142014 to
2015
Value ($ billions)
% change
2012 to
20132014 to
2015
Total energyrelated
petroleum
products
3,544.6
$351.7
3,379.5
-4.7%
$322.7
-8.2%
Crude oil
2,808.7
$272.5
2,763.2
-1.6%
$257.1
-5.7381.4
$316.6
3,242.2
-4.1%
$173.9
-45.1%
Crude oil
2,700.9
$246.4
2,495.1
-7.6%
$128.2
-48.0%
Source: U.S. Department of Commerce, U.S. Census Bureau, Report FT900, U.S. International Trade in Goods
and Services, Table 17, March 7, 2014May 5, 2015.
Note: Estimates for January through December 20132015 were developed by CRS from data in January, 2014, and
-March, 2015,
and data for 2013 published by the Census Bureau using a straight line extrapolation.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 1. Quantity of U.S. Imports of Energy-Related Petroleum Products
Source: U.S. Department of Commerce.
As indicated in Table 2, the dollar value of energy-related imports fell from a total value of $397
billion in 2012 to $352 billion in 2013, or a decrease of 11.4%, to account for about 16% of the
value of total U.S. merchandise imports. In previous periods, energy prices rose sharply in 2007
and continued rising from January through July 2008, not following previous trends of falling
during the winter months. The cost of U.S. imports of energy-related petroleum products rose
from about $17 billion per month in early 2007 to $53 billion a month in July 2008, but fell to
$13.6 billion a month in February 2009, reflecting a drop in the price and in the volume of
imported oil. As Figure 2 shows, the average price of imported oil in January 2014 was $90.21,
down 4% from an average of $94.08 in January 2013, and stands as the lowest average monthly
value recorded since February 2011.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 2. Value of U.S. Imports of Energy-Related Petroleum Products
Source: U.S. Department of Commerce.
As a result of the drop in the overall value of energy-related imports in 2009, the trade deficit in
energy-related imports amounted to $204 billion, down by nearly half from the $386 billion
recorded in 2008, and accounted for 40% of the total U.S. trade deficit of $517 billion for the
year. In 2011, the rise in oil prices, year over year, combined with a slight decrease in energy
imports, pushed up the overall value of energy imports, which accounted for 44% of the total
merchandise trade deficit. In 2012, the share of the U.S. trade deficit attributed to energy imports
on an annual basis was 40%; the share in December 2012 was 33%, down from 42% recorded in
December 2011. In 2013, the share of the U.S. trade deficit attributable to energy imports was at
33%, down from 40% in 2012.
Table 2. U.S. Imports of Energy-Related Petroleum Products, Including Crude Oil
(not seasonally adjusted)
Total energy-related
petroleum productsa
Period
Quantity
(millions of
barrels)
Value
($ billions)
Crude oil
Quantity
(millions of
barrels)
Thousands
of barrels
per day
(average)
Value
($ billions)
Unit price
(dollars)
2013
Jan.-Dec.
3,544.6
Congressional Research Service
$351.7
2,808.7
7,691
$272.5
$97.01
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Total energy-related
petroleum productsa
Quantity
(millions of
barrels)
Period
Value
($ billions)
Crude oil
Quantity
(millions of
barrels)
Thousands
of barrels
per day
(average)
Value
($ billions)
Unit price
(dollars)
January
326.8
31.7
260.7
8,411
24.5
94.08
February
261.0
25.8
204.8
7,313
19.6
95.96
March
280.3
28.2
215.7
6,959
20.9
96.95
April
295.9
29.7
233.2
7,774
22.8
97.82
May
311.4
30.8
240.5
7,759
23.3
96.84
June
291.4
28.7
234.3
7,811
22.7
96.93
July
327.2
32.5
264.2
8,523
25.6
97.07
August
303.2
31.0
239.9
7,739
24.1
100.26
September
289.9
30.0
229.8
7,661
23.4
102.00
October
306.4
31.0
242.4
7,820
24.2
99.96
November
265.9
25.6
212.7
7,091
20.1
94.69
December
286.1
26.7
230.3
7,428
21.0
91.34
8,275
23.1
90.21
2014
January
311.6
29.1
256.5
Source: U.S. Department of Commerce, U.S. Census Bureau, Report FT900, U.S. International Trade in Goods
and Services, Table 17, March 7, 2014.
a.
“Energy-related petroleum products” is a term used by the Census Bureau and includes crude oil,
petroleum preparations, and liquefied propane and butane gas.
Crude oil comprises the largest share of energy-related petroleum products imports. According to
Census Bureau data,6 imports of crude oil fell from an average of 9.8 million barrels of crude oil
imports per day in 2008 to an average of 9.1 million barrels per day in 2009, or a decrease of 7%,
mirroring the sharp drop in economic activity. From January 2008 to June 2008, the average price
of crude oil increased from $84 per barrel to $117 per barrel, or an increase of 39%. As a result,
the value of U.S. crude oil imports rose from about $27 billion a month in January 2008 to $35
billion a month in June 2008. In 2011, crude oil imports averaged 277 million barrels per month
at an average value of $27.6 billion a month. Oil import prices in 2011 rose from about $84 per
barrel in January 2011 to an average of $104.1 in December 2011. As shown in Figure 3, oil
import prices rose steadily between September 2010 and May 2011, fell from June 2011 to
October 2011, and then rose again through December 2011. In December 2012, imports of crude
oil averaged 7.2 million barrels per day, or a decrease of 20% from the volume of such imports
recorded in December 2011, and an increase of 1% over June 2012. Crude oil prices rose from an
average of $94 per barrel in January 2013 to $102 per barrel in September 2013, the highest
average monthly value recorded up to that point in 2013, but fell to an average imported price of
$91.34 in December 2013.
6
Report FT900, U.S. International Transactions in Goods and Services, Table 17, March 7, 2014.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 3. U.S. Import Price of Crude Oil
Source: U.S. Department of Commerce.
As previously indicated, the combination of changes in the volume, value, and prices of crude oil
can have a large impact on the total value of U.S. imports and on the size of the U.S. trade deficit.
Figure 4 shows the annual amounts of the volume, value, and price of U.S. crude oil imports
from 1973 to 2013, represented in index terms with 1990 as the base year. The data indicate that
the overall volume of U.S. imports of crude oil increased by about 27% between 1990 and 2013
in index terms. The price of crude oil, represented by the average price of a barrel of crude oil on
an annual basis, rose by five times between 1990 and 2013 in index terms. As a result, the total
value of U.S. crude oil imports, representing the price per barrel times the number of barrels of
crude oil on an annual basis, rose by over six times between 1990 and 2013 on an index number
basis.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 4. Quantity, Value, and Price of Imported Crude Oil
by the United States, 1973-2013
(Index terms; 1990 = 100)
Source: U.S. Department of Commerce.
Data for 2008 and 2009 indicate that a number of factors, primarily the economic recession, had a
large impact on pushing down oil prices in the first three months of 2009. As economic growth
picked up, the higher demand for oil tended to raise pressure on oil prices, which rose through the
end of the year. The rise in oil prices and an increase in the volumes of oil imports during the
period combined to raise the overall cost of imported energy. At times, crude oil traded for nearly
$148 per barrel in July 2008, translating into higher imported energy costs that had a significant
impact on the overall costs of U.S. imports and on the size of the U.S. trade deficit. Since those
record prices, the price of imported crude oil fell to under $40 per barrel at times in January and
February 2009. For the year 2009, the imported volume of energy-related petroleum products fell
by 44% compared with 2008, due in large part to a slowdown in economic activity. At an average
price of $56 per barrel in 2009, compared with an average price of $95 per barrel in 2008, energyrelated imports fell by nearly $130 billion as a component in the overall U.S. trade deficit. For
2010, the total cost of energy imports rose to $323 billion at an average price of $75 per barrel
and accounted for 41% of the annual trade deficit.
In 2012, at an average price of imported energy of about $101 per barrel, the total cost of energy
imports was $397 billion, or about $25 billion (5.8%) less than the cost of energy imports in
2011, thereby reducing slightly the contribution of energy-related products to the overall U.S.
trade deficit. At the average price through January 2014, the contribution of energy imports to the
overall trade deficit in 2014 could fall by $50 billion from that recorded in 2013.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Issues for Congress
The fall in the prices of energy imports in 2013 compared with 2012, combined with a decrease in
the total volume of energy imports resulted in a smaller contribution to the overall U.S. trade
deficit in 2013. If the trend set in 2013 and January 2014, the contribution of energy imports to
the overall U.S. trade deficit will fall by year-end 2014. The ubiquitous nature of oil in the
economy generally means that changes in energy prices will affect the U.S. rate of inflation and
the rate of economic growth. Various factors, dominated by events in the Middle East, a
slowdown in the rate of economic growth in Asia and other developing economies, and increase
in natural gas production in the United States combined in 2013 to push the cost of energy
imports slightly lower than in 2012. The pace of economic growth was a bit erratic in 2013,
which had an important effect on both the levels of oil imports and on the price of such imports.2014 published by the Census Bureau using a straight line extrapolation.
Oil Import Volumes
Commerce Department data also indicate that in the period of January-March 2015, the quantity
of energy-related petroleum products imported by the United States fell by 4.71% compared with
the comparable period in 2014; crude oil imports in the three-month period in 2015 fell by 7.6%
from the same period in 2014. Compared with the January-March period in 2014, the average
value of energy-related petroleum products imports fell by 45.1% in 2015, while the average
value of crude oil imports fell by 48%.
As Figure 2 shows, imports of energy-related petroleum products can vary sharply at times on a
monthly basis, but the general trend from January 2012 to March 2015 has been downward. In
March 2015, imports of energy-related petroleum products averaged about 286 million barrels per
month, compared with an average of 289 million barrels per month in January 2014, or a decrease
of 1.0%.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 2. Quantity of U.S. Imports of Energy-Related Petroleum Products
Millions of barrels
360,000
340,000
320,000
300,000
280,000
260,000
240,000
220,000
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
200,000
2012
2013
2014
2015
Source: U.S. Department of Commerce.
Oil Import Values
As indicated in Table 2, the nominal dollar value of energy-related imports in 2014 was $316.6
billion, down 6% from the value of energy imports in 2013, which accounted for about 14% of
the value of total U.S. merchandise imports. In previous periods, energy prices rose sharply in
2007 and continued rising from January through July 2008, not following previous trends of
falling during the winter months. The cost of U.S. imports of energy-related petroleum products
rose from about $17 billion per month in early 2007 to $53 billion a month in July 2008, but fell
to $13.6 billion a month in February 2009, reflecting a drop in the price and in the volume of
imported oil. As Table 2 shows, the average price of imported oil in March 2015 was $46.47,
down 45% from an average price of $93.91 in March 2014, and stands as the lowest average
monthly value recorded since April 2009.
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Table 2. U.S. Imports of Energy-Related Petroleum Products, Including Crude Oil
(not seasonally adjusted)
Total energy-related
petroleum productsa
Quantity
(millions of
barrels)
Period
Value
($ billions)
Crude oil
Quantity
(millions of
barrels)
Thousands
of barrels
per day
(average)
Value
($ billions)
Unit price
(dollars)
2014
Jan.-Dec.
3,381.4
$316.6
2,700.9
7,400
$246.4
$91.23
January
311.6
$29.1
256.5
8,275
$23.1
$90.21
February
264.5
$25.2
212.5
7,590
$19.5
$91.53
March
289.7
$28.3
225.0
7,259
$21.1
$93.91
April
297.2
$29.3
238.8
7,960
$22.8
$95.48
May
279.6
$28.0
213.1
6,876
$20.5
$96.12
June
267.2
$26.6
213.9
7,131
$20.6
$96.41
July
294.0
$29.3
238.7
7,701
$23.4
$97.81
August
271.3
$26.6
215.4
6,947
$20.7
$96.32
September
276.0
$26.0
226.5
7,550
$21.0
$92.54
October
279.1
$25.1
224.1
7,229
$19.8
$88.47
November
237.9
$20.0
188.9
6,296
$15.7
$82.95
December
313.3
$23.2
247.4
7,980
$18.2
$73.64
2015
January
292.9
$17.7
222.8
7,186
$13.1
$58.96
February
250.7
$13.3
192.1
6,859
$9.5
$49.53
March
286.6
$14.4
226.4
7,302
$10.5
$46.47
Source: U.S. Department of Commerce, U.S. Census Bureau, Report FT900, U.S. International Trade in Goods
and Services, Table 17, May 5, 2015.
a.
“Energy-related petroleum products” is a term used by the Census Bureau and includes crude oil,
petroleum preparations, and liquefied propane and butane gas.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 3. Value of U.S. Imports of Energy-Related Petroleum Products
Billions of dollars
$40
$35
$30
$25
$20
$15
$10
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
$5
2012
2013
2014
2015
Source: U.S. Department of Commerce.
Oil Import Prices
Crude oil comprises the largest share of energy-related petroleum products imports. According to
Census Bureau data,7 the price of imported crude oil has fluctuated sharply at times. For instance,
from January 2008 to June 2008, the average price of crude oil increased by 39%, rising from $84
per barrel to $117 per barrel. As shown in Figure 4, oil import prices varied in the general range
of $90 and $108 per barrel between January 2012 and October 2014, after which imported oil
prices have experienced a sharp drop. Crude oil prices rose from an average of $94 per barrel in
January 2013 to $102 per barrel in September 2013, the highest average monthly value recorded
up to that point in 2013, but fell to an average imported price of $91.34 in December 2013. In
2014, oil prices rose from $90.21 per barrel in January to $97.81 in July. By December 2014,
however, oil prices had fallen to an average price of $73.64 per barrel. Average monthly imported
oil prices continued to fall during the first three months in 2015, falling to $46.47 in March 2015.
7
Report FT900, U.S. International Transactions in Goods and Services, Table 17, May 5, 2015.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Between March and June 2015, however, average imported oil prices moved upward toward $60
per barrel.
Figure 4. U.S. Import Price of Crude Oil
Dollars per barrel
$125
$115
$105
$95
$85
$75
$65
$55
$45
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
$35
2012
2013
2014
2015
Source: U.S. Department of Commerce.
As previously indicated, the combination of changes in the volume, value, and prices of crude oil
can have a large impact on the total value of U.S. imports and on the size of the U.S. trade deficit.
Figure 5 shows the annual amounts of the volume, value, and price of U.S. crude oil imports
from 1973 to 2014, represented in index terms with 1990 as the base year. The data indicate that
the overall volume of U.S. imports of crude oil increased by about 22% between 1990 and 2014
in index terms. The price of crude oil, represented by the average price of a barrel of crude oil on
an annual basis, rose by four and a half times between 1990 and 2014 in index terms. As a result,
the total value of U.S. crude oil imports, representing the price per barrel times the number of
barrels of crude oil on an annual basis, rose by over five and a half times between 1990 and 2014
on an index number basis.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Figure 5. Quantity, Value, and Price of Imported Crude Oil
by the United States, 1973-2014
(Index terms; 1990 = 100)
Source: U.S. Department of Commerce.
From January 2012 through August 2014, the average monthly price of imported oil moved in a
relatively narrow band around $100 per barrel. Since then, however, the average monthly price
has fallen by nearly half. Should these lower prices hold through 2015, the energy portion of the
U.S. trade deficit will be sharply lower than in previous years. Importantly, as the price of
imported oil has been dropping, the amount of oil imports also has declined, signaling potentially
important changes in the U.S. energy market. The United States has become the world’s largest
combined producer of oil and natural gas, which reduces the need for oil imports. In addition,
continued improvements in the energy use of the economy, or the amount of energy that is needed
to sustain a certain level of economic activity, appear to be continuing to improve. A slow rate of
economic growth also has consequences for energy consumption in the economy and the role of
imported energy products.
Issues for Congress
The fall in the prices of energy imports in 2014 and 2015, combined with a decrease in the total
volume of energy imports, resulted in a smaller contribution to the overall U.S. trade deficit in
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U.S. Trade Deficit and the Impact of Changing Oil Prices
2014 and 2015. If the trend set in 2014 and the first three months of 2015 continues through 2015,
the contribution of energy imports to the overall U.S. trade deficit will fall by year-end 2015
below that set in 2014. The average monthly price of imported oil, however, reportedly rose
during the second quarter of 2015, which likely will increase the share of energy imports from the
10% recorded in March 2015; shares likely will remain below those experienced prior to January
2015. The ubiquitous nature of oil in the economy generally means that changes in energy prices
will affect the U.S. rate of inflation and the rate of economic growth. Various factors, dominated
by events in the Middle East, a slowdown in the rate of economic growth in Asia and other
developing economies, and an increase in natural gas production in the United States, combined
in 2014 to push the cost of energy imports slightly lower than in 2013. The pace of economic
growth in the United States was a bit erratic in 2014, which had an important effect on both the
levels of oil imports and the price of such imports. The pace of economic growth has also been
tenuous in both Europe and Asia, where such economies as China have experienced a slowdown
in their annual rates of economic growth and such major economies as Japan and much of Europe
are continuing to struggle with significant economic challenges.
Typically, energy import prices have followed a cyclical pattern as energy prices rise in the
summer months and fall in the winter. The slowdown in the rate of economic growth in the
United States and elsewhere in 2009 sharply reduced the demand for energy imports and caused
oil prices to tumble from the heights they reached in July 2008. An important factor that often
affects crude oil prices is the impact Atlantic hurricanes have on the production of crude oil in the
Gulf of Mexico and droughts in the mid-Westernmidwestern United States that can reduce the production of
corn and, therefore, the availability of ethanol, which puts upward pressure on gasoline prices.
The return to a positive rate of economic growth in 2010 placed upward pressure on the prices of
energy imports and contributed to the nation’s merchandise trade deficit. Some of the impact of
this deficit could be offset if some of the dollars that accrue abroad are returned to the U.S.
economy through increased purchases of U.S. goods and services or through purchases of such
other assets as corporate securities or acquisitions of U.S. businesses. Some of the return in
dollars likely will come through sovereign wealth funds, or funds controlled and managed by
foreign governments, as foreign exchange reserves boost the dollar holdings of such funds. Such
investments likely will add to concerns about the national security implications of foreign
acquisitions of U.S. firms, especially by foreign governments, and to concerns about the growing
share of outstanding U.S. Treasury securities that are owned by foreigners.
Social turmoil in the Middle East created uncertainty in the oil markets in 2011 and into 2012 and
was an important factor driving up oil prices. In 2013, slower-than-expected economic growth in
various regions of the world reduced slightly the demand for oil and pushed down the average
price of energy imports. Increased energy production in the United States also reduced the
amount of energy imports, which may well have contributed to the forces that tended to draw
down the price of energy on world markets. Higher prices for energy imports may have been one
contributing factor in spurring the economy to improve its energy efficiency, find alternative
sources of energy, or search out additional supplies of energy. For Congress, the lower costs of
imported oil could tend to ease the nation’s merchandise trade deficit. Other economic effects are
more difficult to assess. While lower energy costs should improve conditions for both producers
and consumers, lower energy prices could dissuade energy producers from investing in new
sources of energy, while the increase in consumers’ real incomes from lower energy prices could
either spur consumption, or could encourage consumers to use the extra income to increase
saving and reduce debts.
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U.S. Trade Deficit and the Impact of Changing Oil Prices
Congress, through its nation’s
merchandise trade deficit could add to existing inflationary pressures and complicate efforts to
reduce the government’s budget deficit and to stimulate the economy should the rate of economic
growth continue at a pace that is below its long-run potential. In particular, Congress, through its
direct role in making economic policy and its oversight role over the
Federal Reserve, could face
the dilemma of rising inflation, which generally is treated by raising interest rates to tighten
credit, and a slow rate of economic growth, which is usually addressed by lowering interest rates
to stimulate investment. An increase in the trade deficit may also add to pressures for Congress to
examine the causes of the deficit and to address the underlying factors that are generating that
deficit. In addition, the rise in prices of energy imports could add to concerns about the nation’s
reliance on foreign supplies for energy imports and add impetus to examining the nation’s energy
strategy.
Congressional Research Service
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U.S. Trade Deficit and the Impact of Changing Oil Prices the dilemma of sluggish economic growth, stagnant tax revenues, and
falling prices and deflation. Traditionally, sluggish economic growth generally is treated by
increased government spending and lowering interest rates to loosen credit and to stimulate
investment. The impact on the U.S. merchandise trade deficit also is not straightforward. While
lower imported energy prices reduce the energy component of the trade accounts, the overall
value of exports and imports is determined by a number of factors, including the international
exchange value of the dollar and relative rates of growth in demand for exports and imports. If the
rate of growth in the U.S. economy, even at low rates, outpaces that of its trading partners, the
overall trade deficit potentially could worsen even with lower energy prices due to a relatively
stronger U.S. demand for imports than foreign demand for U.S. exports. Under such
circumstances, Congress potentially could face pressure to examine the causes of the deficit and
to address the underlying factors that are generating that deficit.
Author Contact Information
James K. Jackson
Specialist in International Trade and Finance
jjackson@crs.loc.gov, 7-7751
Congressional Research Service
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