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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (7498)	1/3/2007 6:13:44 PM
From: John Pitera	Respond to of 33421

US single biggest recipient of petrodollars -study Wednesday, January 03, 2007 4:20:03 PM (GMT-06:00) Provided by: Reuters News NEW YORK, Jan 3 (Reuters) - The United States was the single biggest recipient of investments from oil exporters between 2003-2006, according to a Federal Reserve Bank of New York study released on Wednesday. With oil revenues, or so-called petrodollars, expected to have reached about $968 billion in 2006 from around $300 billion in 2002, NY Fed analysts Matthew Higgins, Thomas Klitgaard, and Robert Lerman said investments by oil exporters in U.S. assets likely totaled about $314 billion between 2003-2006. The $314 billion invested in the United States represented less than one-fourth of the more than $1.3 trillion oil exporters invested globally over the three-year period, the largest investment so far. The figures suggested that oil exporters' windfall "whether directly or indirectly" has increasingly financed the large and growing U.S. current account deficit, the analysts said. The U.S. current account shortfall ballooned to an estimated $869 billion in 2006, from about $472 billion in 2002, according to NY Fed estimates. The NY Fed study also indicated that most petrodollar investments found their way into the United States indirectly, as countries like Japan, which had received investments from oil exporters, funneled such inflows back to the United States through the purchase of U.S. securities. On the trade side, oil exporters purchased more goods and services from the euro zone and China, which offset both regions' crude oil imports, the study said. The euro zone's oil imports more than doubled between 2002-2006, rising roughly by $192 billion to $316 billion, but the region's exports to oil-producing nations climbed $77 billion to hit $167 billion. All told, the NY Fed analysts said 41 U.S. cents of each $1 of oil imports came back to the euro zone in the form of higher purchases of euro zone goods. Euro zone exports to oil-producing countries were higher because of geographic proximity, the analysts said. Europe is closer than the United States to the major oil exporters of the Middle East, and two large oil exporters -- Norway and Russia -- are in Europe itself. In the case of China, 60 cents of each $1 in oil purchases sent overseas returned to purchase Chinese goods. "This high figure accords with the explosive growth of China's exports to all markets. ... Given China's gains in market share, the country might well have seen its sales to oil exporters climb sharply, even if oil exporters' purchases worldwide had remained flat in recent years," the NY Fed analysts said. By contrast, just 20 cents of each $1 imported by the United States came back for the purchase of American goods.