Soaring Oil Imports Now Could Hobble The U.S. LaterGene Koretz
While many factors contributed to the latest jump in America's trade deficit, one seems especially ominous. William V. Sullivan Jr. of Dean Witter Reynolds Inc. notes that U.S. imports of crude oil and refined products in July and August hit a record of nearly 10 million barrels a day. Such energy imports since March are up 9.2% from 1993, accounting for some 55% of domestic demand.
America's growing dependence on offshore supplies is particularly worrisome in light of the upward movement of oil prices during most of this year. Sullivan estimates that the energy trade deficit so far in 1994 is running close to a $65 billion annual level, about $15 billion more than last year's deficit.
That trend, says Sullivan, helps explain the dollar's current weakness in currency markets. But a larger danger for the U.S. economy, he warns, may lie some years away "when foreign oil producers may decide to test America's vulnerability to their pricing behavior."