Recent unemployment figures suggest that the U.S. economy is finally getting back on track, even though the progress has been slow. The outlook for 2012 is looking up and the buzz is that the coming year will be better than the last. A major factor influencing this delicate economy is, yes you guessed it, oil.

The price per kilogram of U.S. oil imports (by vessel) in 2011 was about $0.75, up about $0.20 from 2010 figures. The figure below illustrates the price per kilogram of U.S. imports of crude oil by quarter. The price per kilogram plummeted in 2009, along with the U.S. economy. Prices steadily began to rise and peaked in Q2 of 2011, reaching the highest price per kilogram seen in almost three years.

According to Zepol’s TradeView™, in 2011 approximately 20% of U.S. oil imports originated in Canada and 13% originated in Saudi Arabia. Mexico ranks third on the list with a market share of about 12%.  To see additional statistics, visit Zepol's page on HTS Code 2709.00.

 

In the past few years, shale gas has surfaced as an alternative energy source due to considerable advancements in the technology of its extraction and exploration. Although this method has been in the news as a controversial form of extraction for energy, it is still a method that has seen increasing use, particularly in the United States.

Shale gas is produced from shale and is a natural gas. It has become a more widely used form of natural gas, however, there is some controversy as to the effects on the environment from extraction and use. Due to recent advancements, shale gas can now be extracted by hydraulic fracturing (fracking) and also horizontal drilling.

By far, Canada is the largest exporter of shale to the United States. The graph below illustrates that in Quarter 2 of 2011, we see the highest value of imports from Canada since Quarter 3 of 2008. Although there has been a large fluctuation in the import of shale, the overall trend is rising. As we continue to seek alternative energy sources, we will continue to see imports of shale.

In the past few weeks, we have seen one of the largest jumps in gas prices since 2005. There has been a lot of debate recently about the causes of this increase in the price of oil. Although Libya only provides 2% of the oil to the United States, according to a recent CNN, article we can see in the data provided by the U.S. Census Bureau that in fact the price of oil from Libya has increased over the past few months.

The chart below illustrates the total Value of imports for crude oil, which has increased 31% since September 2010 when we started to see the rise in gas prices. We can also see a rise in the price per kilogram of crude oil, which has increased by $0.21 since January 2010 and by $0.18 since September 2010.

While conflict continues in areas that supply oil to the United States, we will continue to see shifts in oil prices.

U.S. pipe makers were pleased with the recent strict penalties that were imposed upon Chinese made drill pipes for oil drilling. The Commerce Department will raise penalties and impose a nearly 20 percent tariff on imports. The ruling concluded that China was unfairly subsidizing the steel industry and therefore selling the products below market value, causing U.S. companies a painful price disadvantage.

Executive director of the Alliance for American Manufacturing, Scott Paul, stated, “Our manufacturing sector alone has lost 5.5 million jobs in just the last decade – with 2.4 million lost or displaced as a direct result of our massive trade deficit with China. We risk losing our competitive edge as a nation unless strong enforcement of our trade laws occurs when cheating exists.” The ruling will slow down imports from China and help domestic producers become more competitive.

The graph below shows a two year trend of imports for drill and line pipe used for gas and oil drilling. Imports from China have dropped significantly in the last year and will likely remain low in the future with the increased tariffs. Even though imports from China have decreased, imports from other countries like Argentina and Czech Republic have shown increases over last year. On the downside, a decrease in imports of the lower priced products will drive the price tags up for the domestically produced pipes. Many in the pipe manufacturing business, however, seem to think the benefits outweigh the costs.