Increasing energy independence and the U.S. economy

Columbia Management, Investment Team | May 7, 2013

  • The U.S. petroleum trade balance has shifted.
  • Development of domestic energy sources benefits domestic goods producers with lower costs.
  • Energy exports modest, but on the increase.

Investors should note the recent shift in the U.S. petroleum trade balance. For many decades, the United States has largely imported oil and petroleum products, widening our trade deficit and increasing our dependence on foreign energy.

With the shale-gas development underway, domestic energy sources have been unlocked, leading to lower costs for consumers and businesses. This has the potential to advantage domestic production of goods at the expense of foreign production, promoting capital flows to the United States.

This has caused a beneficial narrowing in our trade deficit, making us less dependent on foreign, and perhaps unfriendly, sources of oil. The chart below shows this downshift in energy imports and the modest but steady shift higher in our energy exports.

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