A Shrinking U.S. Trade Deficit—Brought to You by Fracking – Businessweek:
US trade deficit is shrinking. Rapidly.
The reason is the import of oil is a very expensive commodity. By the end of this decade, North America should be trade neutral on energy and then move to a surplus thereafter. At peak, the US trade deficit was about 6% of GDP. That is, our GDP would be reduced by the oil that is not produced domestically, but produced afar.
For a country such as Saudi Arabia, with only about $30 to $40 costs associated with producing a barrel of oil, that leaves about $60 of profits. All of that money per barrel leaves the US and goes to foreign governments and foreign companies (or Multi-national companies).
With all the new found oil at home, the GDP jumps by a couple percent. The trade deficit — as it pertains to energy — will shift form a percent or two deficit to becoming a surplus within 10 years.
Economically, this is a beautiful think. If the US were a developing country this would be called economic development utilizing import substitution. Here is a blog on US Energy that discusses the US Energy Outlook Report for 2013. Want to look at forecasts of the future, go to US Energy Information Administration Annual Energy Outlook 2013.
As we drop from 10M barrels per day of oil-type imports to zero we will drop more than $300B in trade deficits (more than 2% of GDP). (See http://www.eia.gov/.)
National security improves.
Of course there is one small caveat. Oil, gas, coal and Nat Gas are non-renewable resources. That means that they must be phased out, sooner or later.
Beautiful thing economically, but with a few clouds surrounding it.