Trade deficit underscores need for Drill Here, Drill Now
posted at 1:30 pm on December 12, 2008 by Ed Morrissey
Investors got surprised this week by the news that the American trade deficit expanded in October by seven percent while the economy began to slow overall. Almost half of that deficit came from oil imports, an increase from the previous month, even though demand slowed. Investors Business Daily advises the incoming Obama administration and 111th Congress that the best recipe for reviving the American economy would be to reduce that deficit and create jobs by drilling here for oil:
It seems funny to talk about a $1 trillion taxpayer- and debt-funded “stimulus” plan when there’s something we could do right away to boost the economy, create hundreds of thousands of jobs, shrink our trade gap and secure our energy independence: Drill for oil here, and drill for it now.
October’s trade data tell why. Despite a record plunge in oil prices from the late summer and into fall, the actual volume of oil we imported went up. Oil still accounts for nearly half our trade deficit (see chart) compared with less than 30% two years ago.
We still spend hundreds of billions each year to buy oil from abroad because we produce less and less of our own energy with each passing day. That leaves us vulnerable to petrotyrants — including Russia’s Vladimir Putin, Iran’s Mahmoud Ahmadinejad and Venezuela’s Hugo Chavez — who would do us ill, using their oil wealth as a weapon against the U.S. and the West.
We’ve talked about this all year, although now the impetus comes from the financial crisis and not high oil prices. IBD reviews the numbers, including estimates that up to 86 billion barrels of oil lie in the outer continental shelf (OCS). That alone would amount to ten years of oil imports, and it doesn’t count oil in ANWR (another 10 billion barrels) and in the shale formations of the interior US (up to 2 trillion barrels of oil).
Instead of spending hundreds of billions in inefficient public-works programs and trillions in bailouts, the Obama administration could create hundreds of thousands of high-paying private sector jobs and generate over $1.7 trillion in government receipts over the next few years. It could use that money to pay down federal debt, or it could use part of it to fund the green alternatives championed by Barack Obama. This solution puts America on a growth solution to the economy rather than a redistributive solution that assumes shortage and decline.
As IBD’s chart shows, a massive production increase would have several salutary effects on our international position. It would greatly reduce our trade deficit, for one thing, which has American capital flying overseas. That would strengthen the dollar and improve energy prices even further. We would also kick the struts out from under petro-fueled hostile governments in Iran, Russia, Venezuela, and other nations. That would reduce the funding they have to sponsor terrorism and build WMDs.
In fact, unleashing American oil production is such a no-brainer that only a Democratic-run government would miss it. Republicans need to press this issue hard over the next few months.