Homemade Deficits

From Investors Business Daily:

Posted 12/14/2005
Trade: Anxiety over trade deficits is misguided. Still, it's funny how deficit alarmists never recommend an obvious solution: reduce reliance on foreign energy.

The Commerce Department on Wednesday reported a U.S. trade gap for October exceeding all forecasts, as industrial materials purchased from overseas climbed by more than $3.5 billion.

Lots of protectionist Chicken Littles are running around warning of dire consequences if American consumers and businesses continue to seek and find bargains on cars, appliances and attire in the global marketplace.
But a big reason we're wealthy enough to buy so much from abroad is that our economy is growing so much faster than Japan's, Germany's and most other industrialized countries. Those nations' economies would be in trouble without their U.S. customers.

The trade deficit does highlight serious concerns surrounding our reliance on foreign nations for oil and natural gas. In October, we imported 305 million barrels of crude oil, 26 million barrels more than in September. Our annual trade deficit from oil is close to $130 billion — a tripling in just one decade (see chart).
While the media wring their hands over a nonexistent "real estate bubble," OPEC is poised to keep oil prices high by cutting output early next year. Analysts at Goldman Sachs predict we may soon be hit by a "super spike" in oil prices that could last for four years — thanks to high demand and low supply growth.



We're not that gloomy, but others are. Interior Secretary Gale Norton warned this week that "America is on the cusp of an energy crisis." Drilling in a tiny 2,000-acre portion of the 19-million-acre Alaska National Wildlife Refuge, she noted, would provide more oil than now supplied by any other state, including Texas.
It "would supply every drop of petroleum for Florida for 29 years, New York for 34 years, Illinois for 43 years." That's a lot of oil.

It would also mean hundreds of thousands of jobs. As Norton also said, the U.S. would have as much as a million barrels more a day to use if drilling in ANWR hadn't been vetoed by President Clinton.

We wouldn't just stop at ANWR. We need a green light from government on exploration in the Rocky Mountains, the continental shelves and other promising offshore areas. Regulatory relief is also vitally needed, especially in the overworked refining sector.

We're free traders on most issues. But when it comes to oil, we'd rather not send billions of dollars to questionable regimes in the Mideast that even now are helping fund jihad against the West.