Early 20th century French philosopher Simone Weil had said, “Petroleum is a more likely cause of international conflict than wheat.” A truer foresight cannot be thought of today, about a century later.
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US President Joe Biden declared on Tuesday that his government is prohibiting Russian oil, natural gas, and coal imports into the US in reaction to Russia’s invasion of Ukraine, a move he cautioned could lead to a surge in domestic gas prices.
“Today I am announcing that the United States is targeting the main artery of Russia’s economy. We’re banning all imports of Russian oil and gas and energy,” in remarks from the White House, Biden stated. “That means Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to Putin’s war machine.”
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Unilateral move – allies more affected by Russian energy
Sanctions against Russia‘s oil and gas industry were originally thought to be largely off the table, as policymakers in the United States and Europe worried about a global price surge. However, as Russia’s attack in Ukraine increasingly targets civilians, pressure on Biden to intervene has grown, notably from Ukraine’s President and American politicians from both parties.
Due to disagreements among European governments on whether to prohibit Russian energy imports, the US is anticipated to act unilaterally, without consulting its European allies. The EU has a much greater vulnerability to Russian energy than the US. The United Kingdom revealed shortly before Biden’s announcement that it planned to phase out Russian oil imports by the end of the year.
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Republicans want to have the cake and eat it too
Congressional Republicans are applauding President Joe Biden’s decision to prohibit Russian oil imports into the United States, a highly anticipated step that could send gas prices to new highs.
In the same breath, Republican leaders, eager to retake the House and Senate in fall, are attempting to capitalise by blaming Biden and his energy policies for higher gas prices.
Republicans believe that Biden can have it both ways – sanction Russian oil while simultaneously keeping American prices low by enabling a massive rise in domestic production, which they claim Biden isn’t doing to further liberal environmental ideals.
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The attacks emphasise the delicate political situation in which Democrats are currently in control, as they struggle to punish Russian President Vladimir Putin for his conflict in Ukraine, deal with rising inflation and gas costs, and defend their shaky congressional majorities.
When hurt, hurt the enemy more
In his speech, Biden underlined that his decision will most likely cost Americans at the petrol pump.
“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 build-up at Ukrainian borders, just since then, the price of gas at the pump in America went up 75 cents and with this action it’s going to go up further. I’m going to do everything I can to minimize Putin’s price hike here at home.”
During a moment of crisis, the President also advised businesses against price gouging.
“To the oil and gas companies and to the finance firms that back them: We understand Putin’s war against the people of Ukraine is causing prices to rise. We get that. That’s self-evident. But, but, but, but — it’s no excuse to exercise excessive price increases or padding profits or any kind of effort to exploit this situation or American consumers, exploit them. Russia’s aggression is costing us all. And it’s no time for profiteering or price gouging,” Biden said.
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The package of economic sanctions and export curbs already placed by the US on Russia, according to Biden, has caused “significant damage to Russia’s economy,” and the value of the Russian ruble has plummeted since Putin launched his attack on Ukraine.
“One ruble is now worth less than one American penny,” Biden said. The President said Russia would not be able to boost the value of the ruble because the West has cut off Russian’s largest banks from the international financial system.
The President noted major companies independently have suspended their services in Russia, including Visa, Mastercard, American Express, Ford, Nike and Apple.
“The private sector is united against Russia’s vicious war of choice,” Biden said.
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Cost of war is the cost of gas
The decision comes as gas prices in the United States soar as a result of Russia’s invasion of Ukraine, which is shaking the global oil market. According to the Oil Price Information Service, the company that collects and calculates prices for AAA, the average price for a gallon of regular gas broke its 2008 record on Monday, reaching $4.14. This shatters the previous record of $4.11 per gallon, which had stood since July 2008.
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US imports from Russia account for a modest portion of the American energy portfolio – around 8% in 2021, with crude oil accounting for only about 3%. Officials said White House economic officials have been discussing how to handle any move to halt certain imports for more than a week. According to the Department of Energy, Russian oil imports plunged to zero in the last two weeks of February as US corporations severed relations with Russia, essentially enforcing their own ban.
The sanctions imposed by the West on Russia in response to its unjustified invasion of Ukraine had previously exempted oil shipments.