K. Jackson Specialist in International Trade and Finance
prices rose sharply between September 2010 and June 2011, at times reaching
more than $112 per barrel of crude oil. Although this is still below the
$140 per barrel price reached in 2008, the rising cost of energy was one
factor that helped to dampen the rate of growth in the economy during the
second half of 2011. While the price of oil was rising, the volume of oil imports,
or the amount of oil imported, decreased slightly. Overall resistance by market
demand to changes in oil prices reflects the unique nature of the demand
for oil and an increase in economic activity that occurred following the
worst part of the economic recession in 2009. Turmoil in the Middle East
was an important factor causing petroleum prices to rise sharply in the first
four months of 2011. Although prices for imported oil fluctuated somewhat
throughout the year, they averaged 30% higher than in 2010 and added about
$100 billion to the total U.S. trade deficit in 2011. The increase in
energy import prices is pushing up the price of energy to consumers and
could spur some elements of the public to pressure the 112th Congress to
provide relief to households that are struggling to meet their current
expenses. With oil prices rising to over $100 per barrel in early 2011,
the International Energy Agency cautioned that the rising price of oil was
becoming a threat to the global economic recovery. This report provides an
estimate of the initial impact of the changing oil prices on the nation’s
merchandise trade deficit.
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