Oil Prices Drive Up U.S. Trade Deficit

Commerce Department Report Shows Gap Grew To $58.2B As Oil Hits $109 Per Barrel

(CBS/AP)  The United States' trade deficit grew larger in January as imports - including crude-oil prices - zoomed to all-time highs.

The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed that the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November.

Imports of goods and services climbed to a record high of $206.4 billion in January. The United States' voracious appetite for imported crude oil, where prices skyrocketed to the loftiest on record, figured into the increasing demand for overall imports.

Oil prices topped $109 a barrel for the first time Tuesday as investors sought refuge from the anemic dollar. Prices reached as high as $109.72 in premarket trading on the New York Mercantile Exchange before edging back. Speculation that rising prices for oil and other commodities will offset the falling dollar has driven oil's rally from $87 a barrel in January.

The trade gap widened even as exports of U.S.-made goods and services totaled a record high of $148.2 billion in January. The declining value of the U.S. dollar, relative to other currencies such as the euro, is helping to make U.S.-made goods cheaper and thus more attractive to foreign buyers.

Economists were expecting the trade deficit in January to be a bit larger - growing to around $59 billion.

Still, rising energy prices are aggravating the nation's trade situation.

The average price of imported crude oil soared to a record $84.09 a barrel in January. That pushed the country's imported crude-oil bill to an all-time high of $27.1 billion in January.

The country's trade deficit with oil producing nations, including Saudi Arabia, Venezuela and Nigeria, grew to $15.5 billion in January, from $12.6 billion in December.

Meanwhile, the United States' politically sensitive trade deficit with China widened to $20.3 billion in January, up from $18.8 billion in the previous month.

The Bush administration says free-trade policies that also make it easier for U.S. companies to do business in other countries is the best way to deal with the country's trade deficits. Democrats, however, blame the president's trade policies for the trade gap and the loss of millions of U.S. factory jobs as U.S. companies moved production to low-wage countries such as China.

Trade tensions with China over the last few years have intensified on a number of fronts. Beijing's currency policies have strained relationships. So have the recalls of Chinese-made goods - from toys with lead paint to defective tired and tainted toothpaste - which have raised questions about the safety of Chinese goods flowing into the United States.

Critics contend that China is engaging in what they believe are unfair trade practices such as keeping the value of its currency artificially low against the dollar. That makes Chinese-made goods less expensive to buyers in the United States and makes U.S.-made goods more expensive in China. The administration has been prodding China to do more to let its currency rise in value.

The United States' trade deficit with Japan decreased slightly to $6.592 billion in January, from $6.593 billion in December. The trade deficit with Canada, however, increased to $5.9 billion, up from $4.7 billion.

However, Wall Street appeared poised to rebound sharply Tuesday after the Federal Reserve and other central banks said they will pump $200 billion into the financial markets to help ease strain from the credit crisis.

The program is part of a worldwide effort to help struggling banks and mortgage providers. The Fed - acting in concert with the European Central Bank, the Bank of Canada and the Swiss National Bank - agreed to loan banks money in exchange for debt that includes slumping mortgage-backed securities.

The Fed's latest move was seen as a direct boost to struggling banks by avoiding having to dramatically slash interest rates when central banks meet on March 18. Economists continued to be concerned about the unrelenting rise in oil prices and the dollar's weakness, which contribute to inflation - and cutting rates only add to these pressures.

[north1949]

And the last price...just off the ticker...110.01 US for a barrel of oil. And another drop in the value
of the US dollar against the Euro. Be prepared!

[mcv57]

Soon, the Bushwacker will blame the mideast for the corrupt greedy government oil "crisis." Yes, there is no crisis, but the economic blackmail the U.S. Government has the American people involved in.

[mcv57]

The New World Order - Under the (Nazi) Fourth Reich
The Bush Nazi Regime
Criminal Corporate Nazi America - The Republican Nazi Party

Posted by lastdance51

Agreed, there is no oil crisis, but we cannot dictate
to the world (Mideast) to meet our demands for oil - U.S. oil demands has more than doubled in the last decade.

Yes, oil rationing by OPEC gives good reason, but the government (White House) and oil corporation are using this as an excuse to profiteer. There would be no question of corruption if energy alternative were address back in the 70s. Pres. Carter initiative was sweep-aside solely to this senario (greed). OPEC must consider its wealth, thereby, evaluating oil deposit quanities remaining (2012-2040 is when the well is dry according to geological studies).

The Arabs know this is a country of waste and arrogance. SUV and Dualies should be ban or restricted by the Federal Government. But the greed will go on, on, on. The present economic system will be protected by the rich and powerful, because otherwise the system will basically rob them of their wealth.

COME ON FOLKS, 50% of the public should be the hybrid systems by now and the Hyro vehicles should be making their debut NOW! Congressional and White House legistration should start outlawing these gas guzzlers, but they are too busy getting rich on this present profiteering schemes.

[albinm]

besides the oil companies charging high prices, oil companies will never allow automakers to sell high mileage vehicles. whenever automakers design and put on the market a gas mizer car, its not on the market very long. oil companies simply change the gas formula so that all cars and trucks get less mpg and charge you more for it. oil companies simply will not allow automakers to make fuel efficient vehicles. oil companies are betting that automakers do not have the technoligy to make alternative energy vehicles viable for years to come. so big oil will charge whatever it wants. i firmly believe detroit can build cars that can get at least 75 mpg if big oil will refomulate their fuel. when i was a teenager growing up in the 70''s i could make a full size car get 29 mpg on the highway at 65 mph. even small cars today only get about that. its time america makes big oil accountable.

[godb4s]

Have you noticed the alcohol in your gas? 10% alcohol @$3.20 a gallon. Not only are they charging high prices for gas but if you put 20 gallons of ethenol in your car you bought 2 gallons of alcohol for the same price as gas...bad for the car and bad for the consumer. Someone is getting ripped off.

[arlt1627]

If we would of drilled for our own oil like Bush wanted to in his first couple of years in office we wouldnt be in this mess. Oil companies are getting rich because of the Dems voting to block us from getting our own oil. The Iraq war has cost 500 billion not three trillion. When will people study the people who do these studies? Like the ones trying to sell a book at Bush''''s cost but realy its costing America the truth.

Imagine how hosed we''d be by being in Iraq "for the next 100 years" or so? If it legitimately (which is a very low mark) cost us $500 billion over 4 full years, that equals $12.5 trillion over this century!! Just great....

We need to re-think our policies and get rid of Bernanke!

[singingrick]

I guess Iraq is a success after all....for Halliburton and Exxon.


Record profits for Big Oil while America slides into recession.



lol!

[singingrick]

Thanks Bu$hies!

[Gary Kempf]

lastdance51;
You really shouldn''t hold back how you feel, spit it out! Don''t be afraid to say how you feel. Your liable to have a heart attack if you don''t speak your mind.

[wdrussell1]

singingrick, the money spent in Iraq in 12 months would be enough to put solar panels on every house in America. But that might benefit somebody other than the rich.