Business news lately has been the same story over and over: The stock market is volatile, politicians hate each other, there aren’t enough jobs, and Europe is a mess. Rinse. Repeat. Day after day.
But some really interesting developments have taken place recently, many of which haven’t received enough attention. Here are three.
1. For the first time since 1949, the U.S. is a net fuel exporter
America has been marred with a poor energy policy for decades. The phrase “dependence on foreign oil” is ubiquitous. And make no mistake: We still rely heavily on foreign nations to feed our energy needs.
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But measured one way — imports and exports of petroleum products like gasoline, diesel, jet fuel, and propane — the U.S. is actually now a net exporter for the first time in generations:
Source: Energy Information Agency.
In 2005, the U.S. imported 840 million more barrels of petroleum products than it exported. In 2011, it exported 27 million barrels more than it imported. This is an incredible turnaround that goes against so much conventional wisdom, yet it’s received scant media attention.
What’s behind the shift? Several things. For one, U.S. demand has declined for some petroleum products. U.S. drivers drove about 57 million fewer miles in 2010 than in 2008, and average gas millage rose to 23.8 miles per gallon in 2009 from 21.9 MPG in 2000, according to the Bureau of Transportation Statistics. Ethanol production is also surging, with capacity rising from 3.1 billion gallons a year in 2004 to 13.5 billion gallons a year in 2011.
At the same time, foreign demand for fuel products is rising. Argentina, Peru, Mexico, Brazil, the Netherlands, and Singapore are all now major net importers of U.S. fuel products. According to The Wall Street Journal, Singapore’s net imports of U.S. fuel products have quadrupled since 2006, while Mexico’s have risen by two-thirds.
This is far from saying the U.S. is energy independent. We still import roughly half the crude oil we use — a reliance of about 9 million barrels a day. But even that figure has declined sharply in recent years. In 2005, we imported 60.3% of our oil. In 2010, that figure was 49.2%, and will likely drop further as domestic production in regions like North Dakota continue to surge.
2. Growth in health-care spending is near a record low
Health-care costs have ravaged household, business, and government budgets for decades. Along with education, health care is one area that has truly experienced extreme inflation over the last several decades.
But the growth rate of health-care spending is actually falling at a shocking rate. According to health policy journal Health Affairs, “The rates of health spending growth in 2009 and 2010 marked the two slowest rates in the 51-year history of the National Health Expenditure Accounts.”
Here’s how this looks over the last half-century:
Source: National Health Statistics Group.
Health-care spending is still growing, of course. It’s just growing at a much slower rate than before. And note that this is health-care spending, not health-care prices. In many cases, health-care prices are rising rapidly (for both treatments and insurance premiums), but overall spending is growing at a slower rate because we’re using less of it — a fact some chalk up to the financial strains of the recession. One example: According to the Kaiser Family Foundation, 69% of businesses offered workers health insurance in 2000. By 2009, only 60% did.
One thing this chart gets me thinking about is whether we’re overly worried about the rising cost of future health-care spending when forecasting the long-term federal budget. The variable that causes the budget deficit to balloon in coming decades is an assumption that health-care costs will rise precipitously. And maybe they will. But the sharp decline in health-care spending growth in recent years shows that health care is just like any other service: If it gets too expensive, we spend less on it.
It’s interesting to ask what happens if growth in health-care spending comes in much lower than we now expect. A huge portion of future budget deficits could be wiped away. And given the track record of budget forecasts, it’s quite likely that what’s expected today won’t happen tomorrow. (Of course, we could also ask what happens if growth is higher than currently anticipated.)
3. The biggest contributor to the budget deficit over the last decade wasn’t stimulus spending, the Bush tax cuts, or two wars. It was tax evasion.
Last week, the IRS released a report on the estimated “tax gap,” or money that people legally owe in taxes but evade paying.
For 2006 (the most recent year calculated), the gap stood at $450 billion, an increase from 2001’s estimated tax gap of $345 billion.