On Net…

January 21st, 2012 at 12:27 pm

The NYT has an interesting piece this AM on the recent increase in US exports, their contribution to growth, and the progress made on the Obama administration’s goal, announced in Jan of 2010, of doubling exports in five years.

I’ve got a beef, however.  The piece doesn’t mention imports.  What matters for growth is NET exports—i.e., exports-imports, and while obviously our net exports do better when we export more, all else equal, analysis like this always reads to me a bit like, “hey, the Wizards scored 92 points last night!  Hooray!…(btw, the Bulls scored 110…).

In fact, since President announced the initiative, net exports have subtracted an annual avg of 0.3 ppts from real GDP growth (2010q1-2011q3—see figure).   Sure, that would be worse without the higher exports of course, but to evaluate what’s going on here re growth and jobs, people need to know the net.

Source: NIPA

The piece makes another point worth amplifying.  The US is producing more oil and gas, and as Lowrey notes, exports of petroleum products, ex crude oil (so stuff like gas, diesel, heating oil, jet fuel) are up.  In fact, as the figure below shows, we’re now exporting more of these petroleum products than we’re importing, for the first time in decades (the figure shows net imports, so when it turns negative in 2011, that means positive net exports; detailed analysis here).  Of course, we’re still importing 50% of the oil we consume, but in the mid-2000s, that figure was 60%.

Source: Energy Information Agency

Don’t get me wrong.  I’m no fossil fuel freak and strongly advocate taxing carbon-based products (a perfectly sound neo-classical economic principle—internalize the externality of environmental damage).  But the idea, promoted incessantly by prominent figures like my good friend but frequent opponent Larry Kudlow, that the Obama administration is hostile to fossil fuel extraction is patently false.


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4 comments in reply to "On Net…"

  1. Nhon Tran says:

    Thank you. See 2nd last para. It’s “Lowrey”, not “Lowry”.

  2. Jean says:

    I have an unrelated question.

    What part is private equity playing in joblessness? Are we in a private equity boom that is exacerbating the joblessness situation?


  3. Bud Meyers says:

    Interesting that you mention oil.

    The Republicans had all voted to continue government subsidies for big oil companies, corporations who are making record profits and aren’t paying their share of taxes. Does that make any sense at all? Is that a free market economic principle? But the big oil executives say that by NOT giving them our money is “un-American”. (Is corporate welfare supposed to be patriotic in a free market?)

    We hear a lot of rhetoric about “energy independence” and “Drill, baby, drill!” – but the Wall Street Journal recently reports, “Thanks to new drilling techniques, such as hydraulic fracturing and horizontal drilling, the U.S. price of natural gas has plummeted, and is now among the cheapest in the world. The new drilling methods has unleashed a flood of cheap natural gas in the U.S. market. Now they’re looking to find new international markets for the surplus production [to export for corporate profits], which would raise natural-gas prices for U.S. customers.”

    And according to the CIA’s World Factbook, the United States is already exporting 2 million barrels of oil a day. So why are we having a discussion about TransCanada’s Keystone XL pipeline if we have an oil shortage and/or need “energy independence” when we’re exporting oil and natural gas?

    Simple answer: For corporate profits, at the expense of U.S. taxpayers.

    I proposed an idea about the Keystone Pipeline, funding a massive non-profit public works program to build an oil company that’s operated and owned by our government (the people) for our own use, buying oil at “cost”. But would anybody listen to common sense?

    But instead, with the Keystone Pipeline, BIG OIL will sell the oil back to the American taxpayers for the highest bid through Goldman Sachs on the commodities market, or export it to places like China….where our jobs went.

    Crony Capitalism vs. Free Markets

  4. Bud Meyers says:

    WSJ: “Increased exports of U.S. natural gas could drive up domestic gas prices as much as 54% in 2018…U.S. manufacturers could face stiffer prices for natural gas and lose a competitive edge over companies abroad.”