We DO NOT Import $700+ Billion Worth of Oil!!!

This is starting to drive me nuts.  T. Boone Pickens, in his ad about our dependence on foreign oil, included a statement that we are sending over $700 billion to foreign countries every year.  That’s true, but IT’S NOT ALL FOR OIL!!!  Less than half is for oil.  The rest represents our trade deficit in manufactured goods. 

Now I’m hearing this repeated everywhere.  During a campaign stop today, even McCain repeated this misunderstanding – that we’re sending $700 billion to foreign oil producers, “much of which can end up in the hands of terrorists,” he said.  Unbelievable!  Even one of our presidential candidates doesn’t understand even the basics about our trade deficit.  He gets his economic information from ads on TV, and it’s not even accurate. 

Everyone, please, watch the Pickens ad carefully!  You’ll see that he doesn’t say that this money is spent on oil.  Is that any reason to be less concerned?  Actually, we should be much more concerned!  At least the deficit in oil doesn’t also include a loss of eight million manufacturing jobs! 

Our trade deficit is, by far, the single greatest factor behind the destruction of America’s economy.  It merits enough attention for people to at least understand the very basics of the problem.

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2 Responses to We DO NOT Import $700+ Billion Worth of Oil!!!

  1. Pete,
    This is the way I get there. The U.S. uses approximately 20 million barrels of oil per day, we import 70 to 75% of that oil, let’s go with 70% That is 14,000,000 barrels imported per day and 5,110,000,000 barrels per year at say $125 per barrel for a total of $638,750,000,000 per year going to foreign oil.

    Since our trade deficit has for 2008 has not been reported, the skyrocketing price of oil has yet to be seen. If things keep going the way that they are, the $700 Billion figure may not miss the mark by much.

    As you say, who cares where the deficit come from, we only care that it exists.

  2. Pete Murphy says:

    Mike, here’s the most recent month’s (June’s) trade data:

    We imported $31.2 billion worth of crude (an annualized rate of $372 billion) and exported $5.7 billion worth of crude (an annualized rate of $68 billion). That’s a net annualized rate of $304 billion. By the way, the average price paid for the imports in June was $106/barrell. It’s rising but, at the same time, the volume of imports has actually begun dropping due to falling demand and the displacement of oil by ethanol.

    At the same time in June, we imported $144 billion worth of non-petroleum goods (the vast majority being manufactured goods). We exported $109 billion of non-petroleum goods, for a deficit of $35 billion. This is an annualized deficit of about $420 billion. Our annual trade deficit in manufactured goods is actually about $490 billion. (We have about a $70 billion trade surplus in “services.”)

    What drives me nuts about this is that people are completely ignoring the trade deficit in manufactured goods, which is actually much larger and more damaging to the economy due to the accompanying loss of jobs. (There is virtually no loss of jobs due to the deficit in oil.)

    Mike, assuming your math is correct and that we do reach the point where our deficit in oil is $600-$700 billion per year in oil, then let’s start saying that we’re sending $1.1-1.2 trillion per year to foreign countries. That should get even more attention.

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