July 5, 2022

The United States bans imports of Russian oil, and Biden warns of 'costs'

The United States bans imports of Russian oil, and Biden warns of ‘costs’

Washington (AFP) – President Joe Biden announced on Tuesday that the United States would ban all imports of Russian oiltightening the burden on the Russian economy in response to its invasion of Ukraine, But he acknowledged that it would cost Americans, especially in pumping gas.

The action follows pleas from Ukrainian President Volodymyr Zelensky to US and Western officials to cut imports, which were a stark omission of the massive sanctions imposed on Russia over the invasion. Energy exports have maintained a steady flow of cash to Russia despite severe restrictions on its financial sector.

“We will not be part of Putin’s war support,” Biden declared, calling the new measure a “severe blow” against Russia’s ability to fund the ongoing offensive.

He warned that Americans would see prices rise, saying: “Defending freedom will be costly.”

Biden said the United States was acting in close consultation with European allies who depend more on Russian energy supplies and who he acknowledged may not be able to join immediately. The announcement marks Biden’s latest attempt to isolate Russia from much of the global economy and ensure that the invasion of Ukraine represents a strategic loss for President Vladimir Putin, even if he manages to seize territory.

“Ukraine will never be a victory for Putin,” Biden said.

The European Union will commit this week To phase out its dependence on Russia for energy needs as quickly as possible, but it will likely take some time to fill the void without crippling the economies of the European Union.

Unlike the United States, which is a major oil and gas producer, Europe depends on imports for 90% of its gas and 97% of its oil products. Russia supplies 40% of European 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 political interests at home and efforts to impose costs on Russia. Although Russian oil makes up only a small portion of US imports, Biden said he has been reluctant to ban it, cutting supplies here and driving up gasoline prices.

Inflation has peaked in 40 years, driven in large part by gas prices, and it could hurt Biden ahead of the November midterm elections.

“Putin’s war is really hurting American families at the gas station,” Biden said, adding, “I will do everything in my power to reduce Putin’s price hikes here at home.”

Gas prices have been rising for weeks due to the conflict and the anticipation of possible 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, up 10 cents in one day, and up 55 cents since last week, according to the AAA Automobile Club.

Biden said he understood that prices were going up, but warned the US energy industry against “excessive price increases” and consumer abuse.

Even before the US ban, several Western energy companies including ExxonMobil and BP moved to cut ties with Russia and limit imports. Shell, which bought a shipment of Russian oil this weekend, apologized for the move on Tuesday amid international criticism and vowed to halt further purchases of Russian energy supplies. Preliminary data from the US Department of Energy shows that Russian crude imports fell to zero last week in February.

In 2021, the United States imported nearly 245 million barrels of crude oil and petroleum products from Russia — a one-year increase of 24%, according to the US Energy Information Administration.

“It’s an important step to show Russia that energy is on the table,” said Max Bergmann, a former State Department official who is now a senior fellow at the Democratic-leaning Center for American Progress.

Bergman said it was not surprising that the United States was able to take this step ahead of European countries, which are more dependent on Russian energy.

“All this is done in coordination, even if the steps are not commensurate,” he said. “We talk to them constantly.”

Bloomberg was the first to report on Biden’s decision on Tuesday.

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 announced, “Block him.”

On Monday, Democrats on the Strong Ways and Means Committee released an announcement of a bipartisan bill to ban imports of Russian oil and impose more trade sanctions on the country, according to an aide, due to the White House’s backtracking. before Biden made his decision.

Pelosi told Democrats at a meeting early Tuesday that the House of Representatives would go ahead with a vote on legislation banning Russian oil imports, according to an unnamed person discussing the special caucus.

“The US economy can fully handle any of the challenges associated with high oil prices,” said Jason Furman, a Harvard University professor and former chief economic adviser to President Barack Obama. But it will bring some challenges. We’ll get higher prices at the pump, and there’s no way around that.”

Prior to the invasion, Russian oil and gas accounted for more than a third of government revenue. Global energy prices rose after the invasion and continued to rise despite coordinated releases of strategic reserves, making Russian exports more profitable.

As a result of the Russian invasion of Ukraine, the United States and international partners sanctioned Russia’s largest banks, its central bank and the Ministry of Finance, and moved to block some financial institutions from the SWIFT messaging system for international payments.

But rules issued by the Treasury Department allow Russian energy transactions to continue through non-sanctioned banks that are not located in the United States in an effort to reduce any disruptions in global energy markets.

German Chancellor Olaf Scholz has said he opposes the European ban on Russian energy imports and that there is no other way to meet the European Union’s needs for automobile fuel, heating, electricity and industrial use. Vice Chancellor Robert Habeck said on Tuesday that when he visited Washington last week, US officials acknowledged that Europe was in a different situation.

They told me in conversations that they would not demand or ask Germany to do the same. But I will infer from that for us, and for me, that we need as soon as possible to create the possibility of taking similar measures.”

While Russian oil makes up a small amount of total US energy imports, the US can replace Russian crude with imports from other oil-rich countries, but this could be a political problem.

Key US senators are warning the Biden administration against seeking any oil import deal from the Nicolás Maduro regime in Venezuela.

“The Biden administration’s efforts to unite the entire world against a murderous tyrant in Moscow should not be undermined by supporting a dictator under investigation for crimes against humanity in Caracas,” said Senator Bob Menendez, Speaker of the House of Representatives. Committee on Foreign Relations, in a statement issued Monday evening. “The democratic aspirations of the Venezuelan people, much like the determination and courage of the Ukrainian people, are worth much more than a few thousand barrels of oil.”

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Associated Press writers Matthew Daly, Lisa Mascaro, and Chris Megarian contributed.