For the past several quarters, US import growth has been pretty lackluster. Ordinarily, this might be concerning—weak imports typically mean weak demand—but in this case, it isn’t. Falling petroleum imports are the primary driver of headline weakness—a happy byproduct of the shale boom and another tailwind for US stocks.
Exhibit 1 shows US import volumes (units, not dollars, in order to remove the skew of fluctuating oil prices) since 1967—total, petroleum and total ex-petroleum. Petroleum peaked in Q2 2007. Today, petroleum imports are back near 1997 levels. Yet headline imports are back at all-time highs, and non-petroleum imports are well into record territory. Demand is robust.
Demand for petroleum products is robust, too! It’s true US petroleum consumption is down from 2007’s peak, but since 2009 it has largely held steady—even as imports have continued falling. Thanks to shale, domestic production is up! In 2009, domestic oil production averaged 162.8 million barrels per month. Year to date, the monthly average is 217.4 million barrels.i
This is great for US firms—more energy produced at home means less money spent shipping it from overseas, which reduces costs. That’s one more reason US earnings are wrapping up their 14th straight quarter of growth.
Exhibit 1: US Import Volumes, Q1 1967 – Q2 2013
Source: Bureau of Economic Analysis, as of 8/29/2013.
i Source: US Energy Information Administration.
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