US Petrodollar GAP

I anticipate global markets to break out of their multi-year growth stagnation for several reasons.  Over the past twelve months, it appears that commodities, energy, and interest rates have all reach a bottom.   That’s good news.  The remaining significant market factor that has not yet confirmed a low is China’s economic slowdown.  Assuming China can stabilize and Trump doesn’t start a trade war, the global economy is positioned for a recover.

Lack of Petrodollars have been one of the major contributors to sluggish global growth.

The below chart puts the Petrodollar gap in perspective.  In 2005 the US imported over 13.3 million barrels of oil per day (mbd) at an inflation adjusted price of $61.65.  Today the US imports about 4.8 mpd at a price of $52.50.  That’s a comparative annual deficit of $150.7 billion dollars that petroleum exporting countries do not have to spend on goods and services.  Thus the slowdown in world trade, especially since oil prices collapsed in 2014.

The global economy is beginning to adjust to the lack of Petrodollars in circulation.  Ultimately lower energy prices will benefit everyone except nations that are heavily reliant on petroleum exports (i.e. OPEC & Russia).

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