Biden warns of higher pump prices as he bans Russian energy

European allies more dependent on Russia may not join the move

Regular gas is priced at $4.99 a gallon at an Exxon station in Washington on Tuesday.  (Bill Clark/CQ Roll Call)
Regular gas is priced at $4.99 a gallon at an Exxon station in Washington on Tuesday. (Bill Clark/CQ Roll Call)
Posted March 8, 2022 at 1:33pm

President Joe Biden issued a ban on the import of oil, gas and coal from Russia in an effort to punish the country for its invasion of Ukraine. He warned the move would require Americans to endure higher gasoline prices.

Biden, who had been hesitant to sanction Russian energy commodities, said Tuesday he made the decision after consulting with allied nations, including in Europe, which is reliant on Russian gas to generate electricity.

“We're moving forward with this ban understanding that many of our European allies and partners may not be in a position to join us,” Biden said.

German Chancellor Olaf Scholz said Monday his nation was not immediately willing to cut off Russian gas though the U.K. announced plans Tuesday to phase out Russian oil and gas by year’s end..

“This is a step that we're taking to inflict further pain on Putin,” Biden said of Russian President Vladimir Putin, adding that the import freeze may lead to higher gasoline prices domestically. “There will be a cost as well here in the United States.”

Biden’s announcement Tuesday comes less than a week after lawmakers introduced bipartisan legislation in both chambers of Congress to shut off U.S. imports of Russian oil, gas and coal and on the heels of calls from Democrats and Republicans to ban imports of all three fuel sources from Russia.

[Moves to ban gas and oil imports from Russia gain steam]

President Joe Biden announced a full ban on imports of Russian oil and energy products as an additional step in holding Russia accountable for its invasion of Ukraine.

Speaker Nancy Pelosi said Tuesday the House would vote on and pass a bill that bans the import of Russian oil and gas products. “This will cut off a major source of revenue for Putin,” Pelosi said in a letter to Democratic colleagues. “Separately, as we work to diminish the Russian economy, we remain laser-focused on bringing down energy costs for American families and our partners.”

The announcement came a week after the administration said it would release 30 million barrels of oil from the Strategic Petroleum Reserve to stabilize global markets. Thirty other oil-producing nations pledged to release a total of 30 million barrels from their reserves as well.

[US, allies to release oil from reserves to stabilize markets]

Biden did not take questions about the ban. He is scheduled to fly to Fort Worth, Tex., for events on veterans and the environmental legacy of burn pits in which the U.S. military burned toxic substances and waste in war zones.

Gas prices

After Biden’s announcement, international per-barrel prices for oil broke the $130 mark as the president said his fellow countrymen would have to shoulder economic burden in their support of Ukraine.

“The decision today is not without cost here at home,” Biden said. “Putin’s war is already hurting American families at the gas pump.”

“Since Putin began his military buildup on Ukrainian borders, just since then, the price of the gas at the pump in America went up 75 cents,” Biden said, “And with this action, it’s going to go up further,” he said, adding that he was “going to do everything I can to minimize Putin’s price hike here at home.”

Members of both parties have urged the administration to deploy all techniques available to stabilize gasoline prices, a topic looming large for the midterm elections.

“Families know Biden’s agenda is to blame for the pain at the pump, and no series of lies will change the reality of his failures,” Republican National Committee Chairwoman Ronna McDaniel said after Biden’s remarks.

The U.S. is the top producer in the world of oil and gas. Biden said companies should not seize the war in Ukraine as a window to raise prices sharply, and he said the world’s nations should race toward renewables, not fossil fuels, as tools of peace.

“Russia’s aggression is costing us all, and it’s no time for profiteering or price gouging,” Biden said, adding that oil and gas companies have 9,000 permits to drill on federal land onshore that they are not using.

Remarking on the war, which as of Tuesday had displaced more than 2 million, according to U.N. officials, Biden said, “It should motivate us to accelerate the transition to clean energy.” Shifting the U.S. energy systems toward low-carbon, non-volatile fuel sources defang oil-states, he said. “That’ll mean tyrants like Putin won’t be able to use fossil fuels as weapons against other nations.”

Richard Nephew, an expert on the use of sanctions for deterrence and impact, said in an interview he didn’t see anything surprising in Biden’s ban, adding that he didn’t expect European partners in the near term to join in because they're more dependent on Russian energy.

“I think it’s something that only we could potentially do of the partners who are going after Russia right now,” said Nephew, who most recently served as deputy special envoy for Iran in the Biden administration, adding he thinks the Europeans appreciate the United States for taking this additional step.

It’s tough to predict just how big of a government revenue hit Moscow will take from the U.S. import ban, said Nephew, who also held senior sanctions policy roles during the Obama administration. Already, some companies have voluntarily reduced their purchases of Russian oil, in part because of the reputational and insurance risks that come with buying from Russia right now.

“It’s going to be pretty hard to disaggregate all of the various effects of this measure or that measure and the voluntary decisions that have been taken by some,” said Nephew, adding he did foresee that within six months, Russia’s total revenues from energy exports will have taken a nosedive.

Drilling

While members of both parties greeted the Russian energy ban, Republicans seized upon it to call for more domestic oil and gas drilling while Democrats said the economy’s sensitivity to petroleum imports underscores the need to shift toward alternative energy sources and electric vehicles.

“We should not be buying a single barrel of oil from Russia, but I want to be very clear any import ban on Russian oil that fails to flip the switch on American energy is incomplete,” said Rep. Cathy McMorris Rodgers, R-Wash., the top-ranking Republican on the Energy and Commerce Committee.

“Our allies should not have to depend on energy from regimes that attack freedom, nor should Americans,” McMorris Rodgers said. “We are facing the gravest military and economic crisis in Europe since WWII.”

While U.S. gas prices lag global prices, the national average Tuesday hit $4.17, up more than $1.30 from a year ago and the highest prices the country has seen since July 2008, according to AAA, the automotive club.

“Banning Russian oil and gas imports is an important part of our broader efforts to deliver crippling consequences to Putin for his unconscionable invasion of Ukraine,” said Sen. Maggie Hassan, D-N.H. “I supported these sanctions along with a bipartisan group of my colleagues, and with President Biden’s announcement today, we continue to send an unwavering, bipartisan message that we will not tolerate Putin’s actions.”

Three percent of U.S. imports of crude oil came from Russia in 2021, according to the American Fuel and Petrochemical Manufacturers, a trade group for the refining industry. Of the rest, 61 percent came from Canada, 10 percent from Mexico and 6 percent from Saudi Arabia.

Environmental groups throttled down on Biden after he announced the ban, pressing him to expand renewable energy sources to weaken the geopolitical hands of oil-heavy nations, such as Russia.

“If Biden sides with fossil fuel executives who are capitalizing on instability, war, and mass suffering, there will be irreversible ramifications that would undermine any chance of him achieving his climate goals,” said Varshini Prakash, executive director of the Sunrise Movement. “But if Biden ushers in a new era of renewable energy, he could be the president that finally declares independence from fossil fuel tyrants and authoritarian petrostates.”

Ellyn Ferguson, David Jordan and Rachel Oswald contributed to this report.