US bans Russian oil imports as Biden warns of ‘costs’
By Zeke Miller, Mike Balsamo and Josh Boak, The Associated Press on March 8, 2022.
WASHINGTON (AP) — President Joe Biden announced on Tuesday that the United States would ban all imports of Russian oil, increasing the toll on Russia’s economy in retaliation for his invasion of Ukraine, but he acknowledged that would lead to cost to Americans, especially at the gas pump.
The action follows Ukrainian President Volodymyr Zelensky’s calls for US and Western officials to halt imports, which had been a glaring omission in the massive sanctions put in place against Russia following the invasion. Energy exports have maintained a steady flow of cash to Russia despite otherwise severe restrictions on its financial sector.
“We will not participate in financing Putin’s war,” Biden said, calling the new move a “powerful blow” against Russia’s ability to finance the ongoing offensive.
He warned that Americans would see a price hike, saying, “Defending freedom is going to be expensive.”
Biden said the United States was acting in close consultation with European allies, who are more dependent on Russian energy supplies. The European Union will this week pledge to phase out its dependence on Russia for its energy needs as soon as possible, but filling the void without crippling EU economies is likely to take some time.
Unlike the United States, which is a major producer of oil and gas, Europe depends on imports for 90% of its gas and 97% of its petroleum products. Russia supplies 40% of Europe’s gas and a quarter of its oil. The United States does not import Russian natural gas.
The issue of oil sanctions has created a conflict for the president between domestic political interests and efforts to impose costs on Russia. Although Russian oil represents only a small portion of US imports, Biden said he was reluctant to ban it, cutting supplies here and driving up gasoline prices.
Inflation is at a 40-year high, fueled in large part by gasoline prices, and that could hurt Biden ahead of November’s midterm elections. He said two weeks ago that he wanted to “limit the pain Americans feel at the gas pump.”
Gas prices have been rising for weeks due to the conflict and in anticipation of potential sanctions on the Russian energy sector. The average price of a gallon of gasoline in the United States hit a record $4.17 on Tuesday, rising 10 cents in one day and 55 cents since last week, according to the AAA auto club.
Biden said it was understandable for prices to rise, but warned the US energy industry against “excessive price increases” and consumer exploitation.
Even before the United States banned, many Western energy companies, including ExxonMobil and BP, moved to cut ties with Russia and limit imports. Shell, which bought a shipment of Russian oil over the weekend, apologized for the move on Tuesday amid international criticism and pledged to halt any further purchases of Russian energy supplies. Preliminary data from the US Department of Energy shows Russian crude imports fell to zero in the last week of February.
In 2021, the United States imported about 245 million barrels of crude oil and petroleum products from Russia, a 24% year-on-year increase, according to the US Energy Information Administration.
“This is an important step to show Russia that the energy is on the table,” said Max Bergmann, a former State Department official who is now a senior fellow at the Democratic Trend Center for American Progress.
Bergmann said it was no surprise that the United States was able to take this step before European nations, which are more dependent on Russian energy.
“It’s all done in coordination, even though the steps aren’t symmetrical,” he said. “We talk to them constantly.”
News of Biden’s decision on Tuesday was first reported by Bloomberg.
The White House announcement comes amid bipartisan pressure on Capitol Hill to ban Russian energy and impose other economic costs.
Last week, House Speaker Nancy Pelosi gave a big boost when she said, “Ban it off.”
On Monday, Democrats on the powerful Ways and Means Committee posted, then deleted, an announcement on a bipartisan bill to ban imports of Russian oil and impose new trade sanctions on the country, an aide said, due to the refusal of the White House to act. before Biden made his decision.
Pelosi told Democrats at a Tuesday morning meeting that the House would move forward with a vote on legislation banning Russian oil imports, according to a person who spoke on condition of anonymity to discuss the private caucus meeting .
“The United States economy can fully handle all the challenges associated with rising oil prices,” said Jason Furman, a Harvard professor and former economic adviser to President Barack Obama. “But it will bring challenges. We’re going to have higher prices at the pump, and there’s no getting around that.
Prior to the invasion, Russian oil and gas accounted for more than a third of government revenue. World energy prices surged after the invasion and continued to rise despite coordinated releases of strategic reserves, making Russian exports even more lucrative.
Following Russia’s invasion of Ukraine, the United States and its international partners sanctioned Russia’s largest banks, its central bank and finance ministry, and decided to block certain financial institutions from the system SWIFT messaging system for international payments.
But rules issued by the Treasury Department allow Russian energy transactions to continue to go through unauthorized banks that are not based in the United States in an effort to minimize any disruption to global energy markets.
German Chancellor Olaf Scholz has said he opposes a European ban on Russian energy imports and that there is no other way to meet the European Union’s needs for fuel, heat and electrical and industrial use. Vice Chancellor Robert Habeck said on Tuesday that during his visit to Washington last week, US officials recognized that Europe was in a different situation.
“They told me during the talks that they would not demand or ask Germany to do the same. But I would extrapolate from that for us, and for me, that we must as soon as possible create the possibility of taking similar measures.
While Russian oil represents a small amount of overall US energy imports, the US could substitute Russian crude with imports from other oil-rich countries, but this could prove politically problematic.
Key US senators are warning the Biden administration against seeking an oil import deal with Nicolas Maduro’s regime in Venezuela.
“The Biden administration’s efforts to unite the world against a murderous tyrant in Moscow must not be undermined by backing a dictator under investigation for crimes against humanity in Caracas,” the senator said. Bob Menendez, DN.J., chairman of the Foreign Relations Committee, in a statement Monday evening. “The democratic aspirations of the Venezuelan people, like the determination and courage of the Ukrainian people, are worth much more than a few thousand barrels of oil.”
AP writers Matthew Daly, Lisa Mascaro and Chris Megerian contributed.