We’re selling more butter and buying more oil
There are some fascinating statistics in our Overseas Merchandise Trade figures which came out today. On the face of it things look good with our March 2008 exports up 3.7 percent from our March 2007 exports (from $3.3 billion to $3.4 billion). However when those exports are broken down by commodity that increase of $100 million is made up entirely of an increase in milk powder, butter and cheese (up $162 million) and crude oil (up $99 million). In other words its caused by rising food prices. A few other commodities went up by a few million here and there, but many of them fell in value, notably manufactured goods (e.g. $66 million less of aircrafts and parts), wool and vegetables.
Meanwhile our imports from March 2007 to March 2008 went up by over $200 million. And as you might have guessed, while we were making money exporting oil because of its high global price at the moment, we were spending even more to import it. Petroleum and products cost us nearly $250 million more than last year.Â
Overall it’s another trade deficit for the month of $50 million:
This is only the second March deficit recorded in the past decade – there was another deficit recorded ($190 million) in March 2005 – and in that 10-year period, the average balance for March months has been a surplus of $100 million (or 3.5 percent of exports).
The trade balance for the March 2008 year was a deficit of $4.5 billion (11.9 percent of exports). The deficit for the February 2008 year was $4.4 billion, while it was $4.8 billion for the January 2008 year.
Oh, and we imported 430% more fertilizer than last year. Â
April 29th, 2008 at 11:56 am
Um is that 430% by weight or value. I think price of some fertilisers are skyrocketing.
April 29th, 2008 at 12:19 pm
That’s by value - again it is probably being driven at least partially by oil prices, but it would be interesting to see the figures by weight too. If anyone has them?
April 29th, 2008 at 12:52 pm
It is not just oil prices. Components are running out. I think phosphate is peaking as well.
April 29th, 2008 at 1:00 pm
Globalisation falls over because the world economy is a subset of the worlds ecosystem, but nothing stops the human population and it’s ability to take over resources. Globalisation would see a leveling between the rich countries and poor but a low average standard of living and as growth continues.. collapse. That’s how I read the situation anyhows.
April 29th, 2008 at 1:04 pm
Housing Bubble Popped by Spike in Fuel Costs, New Analysis Shows
Outlying Suburbs Hardest Hit with Devalued Real Estate
http://www.ceosforcities.org/newsletters/files/Driven_Release_Final.pd f
April 29th, 2008 at 1:07 pm
“According to normal economic theory, and the history of oil, rising prices have two major effects,� said Fatih Birol, the chief economist at the International Energy Agency, which advises industrialized countries. “They reduce demand and they induce oil supplies. Not this time.�
A key reason that supply is not rising to meet demand is that producers outside of the OPEC cartel - countries like Russia, Mexico and Norway - have been showing troubling signs of sluggishness.
http://www.nytimes.com/2008/04/28/business/worldbusiness/28oil-WEB.htm l?_r=2&hp=&pagewanted=all&oref=slogin&oref=slogin
April 29th, 2008 at 3:04 pm
How would the government deal with too large a deficit… ? Once it would have devalued.
April 29th, 2008 at 6:24 pm
Well we can cover a few months of the deficit from the sale of Vector’s electricity network in Wellington..:-)
But of course, in the longer term profit repatriated to Hong Kong will add to the deficit
April 29th, 2008 at 8:27 pm
Brazil Oil Trapped by 500-Degree Heat, Salt Barrier (Update2)
By Joe Carroll
Until the tools needed to exploit the reservoirs are invented, the crude will remain locked under the sea, said Matt Cline, a U.S. Energy Department economist.
http://www.bloomberg.com/apps/news?pid=20601086&sid=aalWn.eJHGZk&refer =latin_america
April 29th, 2008 at 9:24 pm
Any idea what type of fertilizer is being imported? Is it nitrates such as ammonium nitrate and urea, or is it more Potassium, Phosphate or Sulphur types?
Nitrate fertilizers are made from ammonia which in turn is made from hydrogen, which is often made from natural gas (at Kapuni in NZ). However hydrogen can be made by electrolysis so if we had spare renewable electricity resources, we can use them for that. It is one way of exporting energy.
Trevor.
April 29th, 2008 at 10:34 pm
Who’s this “we” that is being referred to in this post? I’m not responsible for what other people sell or buy, and neither is anyone else. As long as people can pay for what they buy and get paid for what they sell, this is largely irrelevant.
Services are completely ignored of course, making this post little more than quaint onanism.
April 30th, 2008 at 9:51 am
What about real estate, perhaps it is a minor factor but given the 25% population increase since 1990 it must have been an issue. Since developers plug into our existing infrastructure and we need a city plan to deal with growth (not to mention potential cold showers) I think it is very much our business how a trade deficit is being dealt with.
April 30th, 2008 at 10:00 am
Its Gun Fight at OK Coral for libertarian philosophy:
http://www.nytimes.com/2008/04/28/business/worldbusiness/28oil-WEB.htm l?_r=2&hp=&pagewanted=all&oref=slogin&oref=slogin
April 30th, 2008 at 12:53 pm
in my view the proper response is to regulate capital flows & foreign ownership - here’s where we went into a bit more depth on this: http://blog.greens.org.nz/index.php/2008/03/21/trade-and-debt/
(part of a long post in that thread)
alas, it’s the other way around - a huge capital inflow does not cover deficit, it creates deficit, & is the opposite to the direction the government should be looking to move in.
this really could be the key moment at which they choose to win or lose the next election
May 1st, 2008 at 2:03 am
Why are we churning out mountains of butter when we could be turning our butter fat into biodeisel and making some serious money.
May 1st, 2008 at 10:22 am
@ $4/pound it’s already serious money!
anyway, butter’s too yummy to burn