U.S. shale boom lowered trade deficit by $250 billion

Falling U.S. petroleum imports have lowered the U.S. merchandise trade deficit by $250 billion from what it would have been otherwise, according to a report from IHS Markit. IHS reports that the U.S.

Production boom has exerted a moderating force on what is a large domestic merchandise trade deficit by helping reduce the country’s net petroleum imports. The boom in U.S. oil and gas production over the past decade has exerted a moderating force on what is a large domestic merchandise trade deficit by helping reduce the country’s net petroleum imports.

A new report by business information provider IHS Markit says. Furthermore, U.S. production growth is now on track to make the country a net-exporter of petroleum for the first time since at least 1949. The findings are part of a new report entitled Trading Places.

How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check. The huge runup in U.S. oil and gas production over the past decade has exerted a moderating force on the country’s domestic merchandise trade deficit by helping reduce net petroleum imports, a new report by business information provider HIS Markit states.

“The improved U.S. trade position in petroleum has been a counterbalancing force helping to keep the U.S. trade deficit in check over the past decade,” said Daniel. Continued U.S. production growth is now on track to make the country a net-exporter of petroleum for the first time in nearly 70 years, Kallanish Energy understands.

This rise, combined with a slight decline in domestic demand, contributed to a sharp fall in U.S. petroleum net imports as a share of total consumption from a high of 60% in 2005 to 19% in 2017, and 14% in nine months of 2018.

The total U.S. merchandise trade deficit in 2017 was nearly $250 billion lower than it otherwise would have been if the petroleum (crude oil, refined products and natural gas liquids) trade deficit had remained at its 2007 level, the report finds.

The continued growth of U.S. crude oil and NGL production along with relatively flat liquids demand are expected to make the U.S. a net-petroleum exporter by early next decade, the report says. IHS Markit projects the U.S. petroleum trade balance will further improve by roughly $50 billion between 2017 and 2022.

The findings are included in the new report entitled Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check. The report examines the impact of rising U.S. oil, natural gas and chemicals production on the domestic trade merchandise balance, and how the U.S. position in energy and chemicals may evolve in coming years.

“The improved U.S. trade position in petroleum has been a counterbalancing force helping to keep the U.S. trade deficit in check over the past decade,” said Daniel Yergin, vice chairman, IHS Markit.

“The resurgence of domestic oil and gas production has flipped the trade position of several products along the energy value chain on their heads, while that of other products, such as crude oil, have been significantly reduced.”

U.S. production of liquids (crude oil and NGLs) nearly doubled, from roughly 7 million barrels a day (Mmbpd) in 2007, to 13 Mmbpd in 2017, and 14.8 Mmbpd in the first nine months of 2018. Crude oil alone rose from 5 Mmbpd in 2007, to 9.4 Mmbpd in 2017, and was averaging 10.6 Mmbpd in the first 9 months of 2018 touching 11.2 Mmbpd in October alone.

The resurgence of U.S. oil and gas production has already altered the domestic net trade position of a number of energy products over the same 2007-2017 period, the report says.

This rise, combined with a slight decline in domestic demand, contributed to a sharp fall in U.S. petroleum net imports as a share of total consumption from a high of 60% in 2005, to 19% in 2017, and 14% in the first nine months of 2018.

“The United States moving from net imports to being a net petroleum exporter would be an historic shift, something not achieved since at least the Truman administration,” said David Witte, senior V.P. IHS Markit estimates the U.S. petroleum trade deficit in dollars fell from about $320 billion in 2007, to roughly $75 billion in 2017, as net imports declined.

During this same time frame, when the petroleum trade deficit was shrinking dramatically, the trade deficit for non-petroleum merchandise grew by roughly $230 billion. The continued growth of U.S. crude oil and NGL production along with relatively flat liquids demand are expected to make the U.S. a net-petroleum exporter by early next decade, the report projects.

“It speaks to the profound and continued impact that the U.S. shale boom has had in terms of investment, job creation, manufacturing, GDP and now trade. The resurgence of U.S. oil and gas production has already altered the domestic net trade position of a number of energy products over the same 2007-2017 period, the report states.

The report does caution that trade tensions between the U.S. and its trading partners could introduce new risks and therefore alter the trajectory of global energy trade and energy demand.

United States is now on track to become a net exporter of petroleum for the first time since at least 1949 with additional trade deficit gains expected.

The boom in U.S. oil and gas production over the past decade has exerted a moderating force on what is a large domestic merchandise trade deficit by helping reduce the country’s net petroleum imports, a new report by business information provider IHS Markit (INFO) says.

Continued U.S. production growth is now on track to make the country a net-exporter of petroleum for the first time since at least 1949. In particular, the report notes recent frictions with China, which is a growth market for U.S. exports of LNG, crude oil, NGLs and gas- and NGL-based chemicals.

The total U.S. merchandise trade deficit in 2017 was nearly $250 billion lower than it otherwise would have been if the petroleum (crude oil, refined products and natural gas liquids petroleum liquids separated out from natural gas and also known as NGLs) trade deficit had remained at its 2007 level, the report finds.

IHS Markit projects that the U.S. petroleum trade balance will further improve by roughly $50 billion between 2017 and 2022. The findings are part of a new report entitled Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check.

The report examines the impact of rising U.S. oil, natural gas and chemicals production on the domestic trade merchandise balance and how the U.S. position in energy and chemicals may evolve in coming years.

IHS Markit estimates that the U.S. petroleum trade deficit in dollars fell from about $320 billion in 2007 to about $75 billion in 2017, as net imports declined. “The improved U.S. trade position in petroleum has been a counterbalancing force helping to keep the U.S. trade deficit in check over the past decade,” said Daniel Yergin, vice chairman, IHS Markit.

“The resurgence of domestic oil and gas production has flipped the trade position of several products along the energy value chain on their heads, while that of other products, such as crude oil, have been significantly reduced.”

“Overall turmoil in world trade patterns could not only dampen trade along the energy value chain but also affect global economic growth and thus impact demand for the many hydrocarbon and chemical products that depend on economic growth,” said Jeff Meyer, director, oil markets at IHS Markit.

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