THE MARKETS
Guns and oil are never a good combination.
As unrest in the Middle East continued last week, oil prices headed north and stock prices headed south. The decline in stocks last week was rather modest, but it still shows how oil is an important component of our economy. Specifically, if oil prices rise too much too soon (and nobody knows exactly what "too much too soon" is), then that could tank economic growth and stock prices.
Let's look at some facts related to oil so we can put the Middle East turmoil in perspective -- at least as it relates to the turmoil's impact on the economy.
In 2009...
· The U.S. was the world's third largest crude oil producer.
· The U.S. produced 11% of the world's petroleum yet consumed 22% of the world's petroleum.
· The U.S. imported 51% of the petroleum we used.
· Of the 51% that we imported, 51% of that came from Western Hemisphere countries.
· Our five biggest suppliers of crude oil and petroleum product imports were:
1. Canada (23.3%)
2. Venezuela (10.7%)
3. Saudi Arabia (10.4%)
4. Mexico (9.2%)
5. Nigeria (8.3%)
· Approximately 14% of our crude oil and petroleum product imports came from the Persian Gulf countries of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates.
· Dependence on OPEC is declining as 41% of U.S. petroleum imports came from OPEC countries in 2009, which is down from 70% in 1977.
The data above comes from the U.S. Energy Information Administration and indicates we are still heavily dependent on imported oil. The good news is a significant chunk of the imports are from friendly and "stable" countries. So, while problems in the Middle East are a serious concern for the U.S. economy, so far, it appears that we we'll have a steady supply of oil. The big question is, at what price?
Data as of 2/25/11 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
|
Standard & Poor's 500 (Domestic Stocks) |
-1.7% |
5.0% |
19.5% |
-1.3% |
0.4% |
0.4% |
|
DJ Global ex US (Foreign Stocks) |
-1.6 |
1.9 |
19.9 |
-3.7 |
1.7 |
4.6 |
|
10-year Treasury Note (Yield Only) |
3.4 |
N/A |
3.6 |
3.9 |
4.6 |
5.0 |
|
Gold (per ounce) |
1.4 |
-0.6 |
28.1 |
14.4 |
20.4 |
18.2 |
|
DJ-UBS Commodity Index |
1.5 |
1.8 |
25.6 |
-7.5 |
0.6 |
4.1 |
|
DJ Equity All REIT TR Index |
-0.5 |
6.0 |
35.6 |
2.9 |
2.5 |
11.7 |
Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.
