As much as we write about “Saudi America,” we also try to keep its benefits to the broader economy in perspective.
For instance, more abundant oil and natural gas has helped lower the cost of manufacturing — but there’s some evidence suggesting the scale is limited.
And it’s definitely created jobs, but not enough tip the economy into permanent bullish mode.
In his latest post, Econbrowser blogger and UCSD professor James Hamilton offers up another data point that provides some much-needed context for the shale boom.
You may have heard that oil production is about to surpass imports.
But Hamilton says import data alone is incomplete.
Instead, he charts the value of expenditures on oil imports as a percentage of GDP:
The economic burden of imported oil is represented not by the number of barrels, but instead by the real value of the resources we must surrender in order to obtain the oil. The dollar value of petroleum imports as a share of GDP has come down a little as a result of recent gains in production and conservation, but still remains significantly elevated relative to the levels of a decade ago.
This is also more evidence that “American energy independence” is kind of a canard.
Bottom line: the arrow’s pointing in the right direction, but we need to keep it going.