The dramatic drop in global oil prices, coupled with soaring U.S. energy production, is helping to ease America’s trade deficit, the U.S. Commerce Department reported Friday. The deficit dipped slightly to $43.4 billion in October as the nation’s bill for foreign petroleum imports reached a five-year low.
Imports of crude oil in October fell 0.6 percent from the previous month to $26.2 billion, the lowest level since November 2009. That drop helped offset the climb in America’s overall imports, which rose 0.9 percent to $241 billion that month, according to commerce data.
Falling oil prices, however, also somewhat suppressed the amount that America’s energy companies could fetch abroad. Exports of petroleum products dropped 1.1 percent to $11 billion in October, though the U.S. is still on track to export record amounts of oil this year, the Associated Press noted. Total U.S. exports grew by 1.2 percent to $197.5 billion after slipping in September.
Crude oil prices have steadily declined throughout the year as demand weakens in China and Europe and supplies accumulate in the global market. Brent crude, an international benchmark, fell to nearly $69 a barrel on Friday -- its lowest level since late 2009 -- after Saudi Arabia cut its official selling prices in an attempt to gain market share, Reuters reported. U.S. benchmark West Texas Intermediate crude is nearing a five-year low as a result and was trading at $66.52 early Friday.
The price drop is partly the result of rising U.S. energy production, which is boosting the world's overall supply. American crude production is at its highest levels in more than three decades thanks to advances in drilling technology, including fracking, and investment in shale fields in North Dakota and Texas. The U.S. Energy Information Administration says it expects U.S. crude production to reach a 45-year high next year. Drillers could extract 9.53 million barrels per day in 2015 -- about 1 million more barrels a day than this year's yield.
At the same time, the scope of America’s crude and light condensate oil resources continues to expand. The federal statistics agency on Friday announced that prove reserves -- or resources that can be tapped with existing technology and under current economic conditions -- are at their highest levels since 1975. Reserves rose 9.3 percent to 36.5 billion barrels in 2013, according to an EIA report.
The surge in American production and falling global prices is increasing pressure on federal trade officials to lift a nearly 40-year ban on U.S. crude oil exports. Oil companies argue that, with oil below $70 a barrel, producers can’t fetch the best possible price if they’re limited to selling crude at home.
“This is a global competition for market share,” Erik Milito of the American Petroleum Institute, a lobbying group, told Bloomberg News in a Friday story. “These other regions around the world want to raise the competitive pressure on U.S. energy, and we’re asking our policymakers to at least put the U.S. on a level playing field.”
Federal lawmakers are holding a hearing next week to consider dropping the crude export ban, a policy enacted by former U.S. President Gerald Ford following the Arab oil embargo crisis. Sen. Lisa Murkowski, R-Alaska, said the 38 percent drop in U.S. benchmark prices “will weigh into the debate” and help make the case for allowing American exports, Bloomberg noted.