- THE MAGAZINE
Energy trade has long been a key component of overall U.S. trade flows. Recent developments in U.S. energy production, notably the rapid growth of tight oil and shale gas output, are leading to significant changes in the nation's energy trade flows. Another important factor is consumption trends, which reflect both increased efficiency of vehicles and other energy-using equipment, and structural changes in the economy. This article, which focuses on current energy trade in the context of overall trade flows, will be followed by several others in the coming days that consider the evolution of trade flows in major energy fuel categories since 2002.
As shown in the figure above, overall U.S. trade includes both goods and services but is dominated by goods. In 2013, as in other recent years, the United States was a net importer of goods and a net exporter of services. Energy accounted for 15 percent of gross U.S. goods imports in 2013, while energy exports, which have grown significantly in recent years, accounted for 7 percent of overall U.S. goods exports. Focusing on the net U.S. trade position, shown by the black line in the chart above, net-energy imports account for nearly half of the total U.S. trade deficit in goods and services.
The value of energy trade flows can move rapidly as a result of changes in production, consumption, and prices. In 2013, the value of energy fuels exports increased 8 percent relative to 2012, while the value of energy fuels imports fell 11 percent. Given the prominent role of energy fuels in U.S. trade accounts, this shift pushed the total U.S. trade deficit in 2013 to the lowest level in four years.
Crude oil was the largest single U.S. import by value among all goods in 2013, as it has been for many years. Crude oil and petroleum products hold a dominant share of U.S. energy trade, relative to other energy commodities such as natural gas, coal, nuclear fuels and electricity.
The value of any energy trade flow reflects its price multiplied by its volume. When both prices and volumes move in the same direction, the value of that flow moves even more rapidly in that direction. For example, both natural gas import volumes and natural gas prices have generally declined since 2008, reducing the recent monthly value of U.S. natural gas imports. When volumes and prices move in opposite directions, as occurred in oil markets, change in the value of energy commodity trade flows may be modest despite significant changes of net trade flows.
In 2013, the value of U.S. energy net imports was 19 percent below its year-ago level, falling from $304 billion to $246 billion. A number of factors contributed to the decreased value of net-energy imports, including:
- A 16 percent decrease in the value of net crude oil imports, from $310 billion to $268 billion
- A 55 percent increase in the value of net exports of fuel oil and other refined petroleum products, from $21 billion to $33 billion
- A 14 percent decrease in the value of net natural gas imports, from $10.3 billion to $8.8 billion
- A 16 percent decrease in the dollar value of net coal exports, from $3.9 billion to $3.2 billion
Net-energy imports as a share of total U.S. energy consumption have decreased from 30 percent in 2006 to less than 20 percent in 2012. In the 2014 Annual Energy Outlook Reference case projections, net-energy imports as a share of total U.S. energy consumption fall to 6 percent by 2020 and to 3 percent by 2035. Increasing onshore oil and natural gas production, aided by horizontal drilling and hydraulic fracturing technologies, will allow the United States to continue to reduce its net imports of crude oil and to increase refined product exports (such as diesel fuel to Europe) and become a net natural gas exporter later this decade.