What does Biden’s ban on Russian oil imports mean for people in the US? What to know
On March 8, President Joe Biden announced that the United States will ban “all imports of Russian oil and gas and energy.”
“That means Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin’s war machine,” Biden said.
Biden said the decision was made in close consultations with U.S. allies in Europe, because a “united response to Putin’s aggression has been my overriding focus.” However, he added that many European countries “may not be in a position to join us.”
What happens now as the U.S. bans Russian oil?
The first direct consequence will be a rise in prices, experts say.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Russian Deputy Prime Minister Alexander Novak said on March 7 in an address on state television, according to CNBC.
“The surge in prices would be unpredictable. It would be $300 per barrel if not more.”
“By removing the Russian imports and not having an immediate adequate replacement, then obviously prices are going to go up,” Max Pyziur, director at the Energy Policy Research Foundation, told McClatchy News.
These price rises would come at a time when many U.S. consumers are already seeing record highs at the pump.
The extent of the price increase will depend on whether other countries join in on a Russian oil ban, Dr. Brenda Shaffer, a foreign policy and international energy specialist, told McClatchy News.
“If it’s just the United States, it’s not as serious a rise as if it was all consumers banning imports of Russian oil. But still, it will increase prices,” Shaffer said.
“So in the short term, high price impact, volatility, consumers are going to expect higher prices at the pump until you have an adequate substitute,” Pyziur said.
The ban could also mean a big risk of a global recession, Shaffer warns.
“What we’ve done is actually we fired the economic nukes and we might be in some sort of economic mutual destruction,” she added.
In a March 7 press briefing, White House press secretary Jen Psaki said the U.S. “will continue to have conversations with large oil producers and suppliers around the world about how to mitigate the impact and consider domestic options as well.”
“I would note that what the President is most focused on is ensuring we are continuing to take steps to deliver punishing economic consequences on Putin while taking all action necessary to limit the impact to prices at the gas pump,” Psaki added.
How will the ban impact Russia?
“Russia is going to need to find markets in order to find revenues for its treasury,” Pyziur said.
“And that’s the point of it,” he said of the ban. “It is to try to find non-military ways of dealing with Russia’s aggression without resorting to things like actual military action, invasions, and things like that.”
But as of now, Russia found a loyal customer for its oil in China, Shaffer explained.
China doesn’t “care about the sanctions so they’re buying oil on the cheap while Europe and the U.S. are buying at a much higher price,” she said. “It doesn’t fundamentally affect the revenue to Russia because if the price rises, even if they’re selling less barrels, they’re selling at a very high price.”
What other alternative for oil does the U.S. have?
About 8% of U.S. imports of oil and refined products came from Russia in 2021, The Wall Street Journal reported.
For now, there aren’t any other immediate alternatives for the U.S. to get that amount of oil from, experts say.
Shaffer warned that the Biden administration considering turning to countries like Venezuela or Iran to substitute Russian oil could be dangerous.
Neither Venezuela nor Iran currently can produce enough oil to supplant the Russian supplies, Shaffer added.
“If you, in order to sort of stop Russia, you empower Venezuela and Iran, what have we achieved here in terms of international security?” she said.
In short, “we really can’t just ban Russian oil, it’s like 10% of the global oil supply,” Shaffer said.
“It’s almost impossible to take down 10% of the production without prices going so high that they trigger a global recession and you have all-out shortages,” she added.
How long will it affect U.S. consumers?
This looks as though it’s going to be a problem for months to come, Pyziur said.
“So even a week ago, you saw huge discounts on Russian oil,” he said. “Companies like BP, Shell and others that have established trading operations to procure Russian oil for export to other countries began feeling the pressure of not doing so.”
“So that was the implicit threat – now you have the explicit threat,” Pyziur said. “There was already the foreshadowing that this was going to come and we already know what the effects are going to be.”
But, for now, Shaffer said U.S. consumers shouldn’t worry about shortages.
Why doesn’t the U.S. use its own oil?
The Biden administration has long advocated for lowering the U.S. crude oil and petroleum production, Pyziur explained, encouraging renewable energy alternatives as a way to lower greenhouse gas emissions.
Experts say one of the main reasons that American oil production hasn’t bounced back to the pre-COVID levels is because of the administration’s policies and anti-fossil fuel sentiment.
“For so-called, you know, climate reasons to substitute American oil with Venezuelan oil, beyond all the geopolitical reasons, it actually is a poor climate and environmental decision as well,” Shaffer said.
If there was some real effort to boost U.S. production, it could make a difference in six to nine months, Shaffer said, but it wouldn’t help in the short run.
“We are in a situation of war. This isn’t just an isolated event in Eastern Europe. This is something that affects the world,” Pyziur said. “It’s going to impact living standards. It’s going to impact national security, it’s going to impact food security, it’s going to impact energy security – all these things.”
This story was originally published March 8, 2022 at 12:36 PM with the headline "What does Biden’s ban on Russian oil imports mean for people in the US? What to know."
