Wednesday, December 18, 2013
James K. Jackson
Specialist in International Trade and Finance
Imported petroleum prices hovered around $95 per barrel of crude oil between January 2013 and July 2013, before reaching about $100 per barrel of crude oil in August 2013. Although this is still below the $140 per barrel price reached in 2008, the rising cost of energy is one among a number of factors that restrained the rate of growth in the economy during the first half of 2013. The average price of an imported barrel of crude oil in the January-August 2013 period fell 6% below the comparable period in 2012, the volume of oil imports, or the amount of oil imported, decreased by nearly 11% from the comparable period in 2012. As a result, the value of imported crude oil in the January-August period in 2013 fell nearly 16% from the comparable period in 2012.
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 was an important factor that caused petroleum prices to rise sharply in early 2011 and in 2012. Although prices for imported crude oil fluctuated somewhat throughout 2011, they averaged 30% higher than in 2010 and added about $100 billion to the total U.S. trade deficit in 2011. On average, energy import prices in 2012 were slightly higher than they were in 2011, pushing up the price of energy to consumers. During the same period, the total amount of petroleum products imported by the United States in 2012 fell below that imported in 2011, reducing the overall cost of imported energy to the economy and the overall trade deficit. Oil futures markets in November 2013 indicated that oil traders expect crude oil prices to trend around $94-$95 per barrel through late spring 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 nation’s merchandise trade balance.
Date of Report: November 22, 2013
Number of Pages: 13
Order Number: RS22204
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