Oil and the real trade balance

  The US real trade balance has been bouncing around current level for the last two years –being neither a significant contribution nor a significant drag on  growth.  This is a significantly different picture than the nominal trade balance shows  where the trade deficit is still widening.

Much of the apparent stability in the real trade balance has been oil as the real non-oil trade balance
has continue to widen and dampen economic growth.

On a net basis — imports less exports– oil imports have collapsed over the past few years.  Net real petroleum imports  are  now only about half of their peak level in 2005..

 Moreover, oil  exports — both crude and refined products — are now equal to about one third of imports
as refiners are taking advantage of the lower price of West Texas Intermediate to take foreign markets away from foreign refiners that use the more expensive Brent crude.  This data also demonstrates that all the  wild claims about the need to open a new pipeline from Canada is just political posturing.  Oil is almost perfectly fungible and it will make little difference to the world oil markets or what we pay for oil, if Canada exports its oil via pipelines  to Oklahoma or through its Pacific ports.  Essentially all  the pipeline would do is permit US Gulf Coast refineries to refine the Canadian oil and reexport it.