U.S. Now Enjoying A 'Fracking Dividend'

Following the end of the Cold War, there was much talk about the coming Peace Dividend. It probably did contribute to growth during the 1990s, but then the 9/11 attacks led to America’s wars in Afghanistan and Iraq. Now we can look forward to the Fracking Dividend. It is already having a dramatic impact on lowering America’s dependence on foreign oil.

In fact, there is mounting industry pressure on the government to permit the export of crude oil, which has been banned since the energy crisis of the mid-1970s. There is no ban on the export of petroleum products. The result has been a surge in such exports recently, while imports of both crude oil and petroleum products remain on a downward trend.

All this is starting to have a significant impact on reducing the US merchandise trade deficit, as evidenced by yesterday’s report with November data. US imports of crude oil and petroleum products dropped to the slowest pace since November 2010, while such exports rose to a record high.

The Fracking Dividend has already narrowed this US petroleum trade deficit from a recent peak of $359 billion (saar) during January 2012 to $182 billion during November 2013. The deficit could go to zero over the next couple of years. That would provide a big dividend to real GDP growth, as well as more purchasing power for Americans. Building the infrastructure to export crude oil would be another benefit, especially for capital goods manufacturers.

Today's Morning Briefing: Looking Up. (1) No end to the endgame. (2) Awesome 2013. (3) Still keen on Consumer Discretionary, Financials, and Industrials. (4) Year # 6 for charged-up bull. (5) Investors more upbeat, less anxious than a year ago. (6) Back to “Old Normal” growth? (7) Less fiscal drag. (8) More US oil. (9) The Fracking Dividend. (10) Learning to tolerate tapering. (11) Europe’s tepid recovery. (12) China issuing bonds. (13) Focus on overweight-rated S&P 500 Transportation.