- The move against Russian energy imports comes almost 2 weeks after the invasion of Ukraine.
- The ban is expected to deliver a devastating blow to the Russian economy.
- US gas prices are expected to rise in light of the ban, but the extent is unclear yet.
WASHINGTON – President Joe Biden announced a ban on the U.S. import of all Russian energy in the latest effort to ratchet up sanctions over Russia’s invasion of Ukraine, “targeting the main artery of Russia’s economy.”
“Russian oil will no longer be accepted at U.S. ports,” the president said in remarks Tuesday at the White House. “We will not be part of subsidizing Putin’s war.”
The president said he made the decision in consultation with European allies but added they are not in a position to join the U.S. in banning Russian energy imports. He said the U.S. is working closely with European allies to develop a “long-term strategy” to reduce their dependence on Russian energy.
U.S. and European allies had previously insulated Russian oil from the sweeping economic sanctions placed on Moscow, citing its effect on the global energy markets. But the ban is expected to deliver a devastating blow to the Russian economy, which relies on oil and gas production for more than 40% of the country’s revenue.
Though Russia doesn’t export much oil to the U.S., the ban is expected to drive up prices that have already soared at the gas pump.
“In the short term, you’re going to see prices definitely go up,” said energy expert Gianna Bern. “How much, it remains to be seen, and where and how the void gets filled.”
But Bern, a finance professor at the University of Notre Dame’s Mendoza College of Business and author of “Investing in Energy,” called the ban “the biggest opportunity to make a dent in” Russia’s coffers.
“The oil and gas imports that have been coming into the United States needed to be addressed,” she said.
Biden’s announcement comes as the White House faced mounting pressure in Congress to act on Russian energy. A bipartisan group of lawmakers said Monday it had reached a deal for a legislative path forward to ban the U.S. import of Russian energy products and suspend trade relations with Russian and Belarus over the invasion of Ukraine.
White House press secretary Jen Psaki said no decision had been made as of Monday, when asked about the legislation.
US can ban imports more easily than Europe
While the U.S. has closely coordinated with allies in imposing sanctions, it would be more difficult for European countries to ban imports because of its greater dependence on Russian oil and gas.
Russia, the world’s third-largest producer of oil and second-largest producer of gas, supplies about 30% of Europe’s oil and 40% of its natural gas.
“It’s going to be headache here. Make no mistake. Maybe more of a migraine,” said Patrick DeHaan, head of petroleum analysis at GasBuddy, which monitors fuel supply and prices. “It’s not the end of the world for the U.S., but it would be much closer for Europe.”
German Chancellor Olaf Scholz said Monday that Europe cannot secure its energy supplies without imports from Russia, while Hungary’s finance minister said that country would not support sanctions on Russian energy.
“I would look at it through a different prism than past coordinated efforts,” Psaki said Monday when asked about the U.S. potentially banning Russian oil.
Energy companies including ExxonMobil and BP have moved to sever ties with Russia, despite Western reluctance to cut off Russian energy imports. Shell, which apologized for purchasing a cargo of Russia crude oil after the invasion, said it would shut down its operations in the country and no long purchase Russian oil.
In 2021, the U.S. imported about 700,000 barrels per day of crude oil and petroleum from Russia, according to the White House. The Europeans imported about 4.5 million barrels per day of oil.
Russian imports account for about a third of Europe’s oil imports, Psaki said Monday.
Even before Biden’s announcement, the stock market fell and energy prices jumped Monday as lawmakers and administration officials discussed imposing more sanctions.
How high will gas prices go?:Why are gas prices rising so quickly? And how high are they expected to get?
Record U.S. gas prices
The Biden administration has released oil from the Strategic Petroleum Reserve to ease prices.
But the national average for a regular gallon of gas broke the all-time record in the United States on Tuesday. The average cost was $4.17, an increase of more than 50 cents from last week, according to AAA.
The administration has been talking with large oil producers and suppliers around the world about how to mitigate the impact.
Psaki was pressed Monday about conversations administration officials have had with oil-producing Venezuela, Iran and Saudi Arabia – countries accused of committing human rights abuses or other troublesome acts. She said discussions with those countries have been on a range of issues.
“It’s in everyone’s interest to reduce the impact on the global oil marketplace,” she said.
But New Jersey Sen. Bob Menendez, the chair of the Senate Foreign Relations Committee, said Monday that the administration’s efforts to stop Russia should not be undercut by propping up Venezuelan President Nicolás Maduro.
“The democratic aspirations of the Venezuelan people, much like the resolve and courage of the people of Ukraine, are worth much more than a few thousand barrels of oil,” he said in a statement.
Bern said the U.S. could fill the gap by increasing imports from Canada and Mexico.
But she said pump prices might not fall until the price of crude oil rises so much that the transportation sector and everyday drivers reduce their use in response, decreasing demand.
“We’re not there yet,” she said, “but I think it could happen.”
DeHaan said cutting off Russian oil could send record-high gas prices in the U.S. even higher for the summer driving season.
“It’s difficult to parse out, but I think we’re headed to $4.50” per gallon, DeHaan said. “By the summer driving season, by the Memorial Day weekend, it’s really going to pinch Americans who are living check to check.”
Higher prices could remain for months, rather than just days or weeks, he warned, with price hikes affecting all types of fuel, including gasoline, diesel and jet fuel.
Shortly before the announcement, the head of the Republican National Committee attacked Biden over high gas prices, without saying whether the GOP supports the import ban.
Instead, RNC Chairwoman Ronna McDaniel said in a statement that “American families are feeling the pain at the pump, and Biden and the Democrats do not care and are making it worse.”
Contributing: Bart Jansen