Oil import prices fuel 7% jump in US trade deficit

Oil import prices fuel 7% jump in US trade deficit

THE US trade deficit widened in August to its second-highest level on record, fuelled by the highest oil import prices in 23 years and record imports from China.

The monthly trade gap totalled $54 billion (£30bn), expanding nearly seven per cent from £28bn for July. The trade gap hit an all-time high of £30.6bn in June.

US imports from the Organisation of Petroleum Exporting Countries hit a record £4.9bn, while the trade deficit with those countries widened to a record £3.9bn. Average prices for imported oil rose to £20.22, the highest level since June 1981.

Strong world demand and fears of supply disruptions have been pushing up world oil prices, with US crude market prices passing $50 (£28) per barrel in recent weeks.

The politically-sensitive trade deficit with China widened to a record £8.6bn in August, as imports hit a record £10bn. The Bush administration has so far been unsuccessful in its effort to persuade the Communist country to move to more flexible exchange rate policies.

The Commerce Department report gives Democratic presidential candidate John Kerry new ammunition in his bid to unseat George Bush when voters go to the polls on November 2.

Senator Kerry has blamed the huge and growing trade gap on Bush’s economic policies and his alleged failure to aggressively enforce US trade agreements.

The Bush administration argues the trade deficit reflects the strength of the US economy that is pushing demand for imports.

http://business.scotsman.com/economy.cfm?id=1201122004