ANZ Morning Brief: US continues moving towards oil self-sufficiency

The shale oil boom might not be popular with everyone but its positive impact on the trade balance is starting to be demonstrated. In December, the US trade deficit narrowed sharply thanks largely to record petroleum exports, with the monthly trade deficit some USD7.5bn better than expected. The provisional GDP estimate of -0.1 percent assumed a larger trade deficit. Greater fuel self-sufficiency and cheap gas in particular is providing a boon to US manufacturers, and is one of the factors behind “reshoring” – the relatively recent phenomenon of manufacturing returning to the US from Asia and other manufacturing bases whose primary appeal is cheaper labour. It also helps consumer and government finances. All up, it may be finite, but cheaper energy gives the US a big economic head-start over coming years. The trade data also revealed that China passed the US last year for the first time to become the world’s largest trading nation in terms of the annual sum of exports and imports. However, the US economy is still more than twice the size of China ’s, according to World Bank estimates.