Biden acknowledged that the decision will drive up already record high gas prices in the United States and pleaded with energy companies to refrain from using this crisis to defraud consumers.
“[Russia’s war on Ukraine] there is no excuse for exercising excessive price increases, increasing profits or any type of effort to exploit this situation or American consumers,” Biden said. “Russia’s aggression is costing us all, and now is not the time to profit or inflate prices.”
A senior administration official, speaking to reporters on Tuesday afternoon, echoed Biden’s call for U.S. energy producers and Wall Street to “come together” to bring soaring global prices under control and soften the blow of the US ban on Russian oil imports.
As oil prices eclipse $130 a barrel, the official said companies and investors have all the financial incentive they need to produce more or drill on thousands of unused permits on federal lands.
“Now is the time for Wall Street to step up, for oil and gas companies to step up and invest in America’s energy future,” the official said, speaking on condition of anonymity. to discuss ongoing policy deliberations.
At the start of the invasion two weeks ago, Biden declined to impose sanctions on Russian oil, citing an effort “to limit the pain the American people are feeling at the gas pump.” White House press secretary Jen Psaki again underscored that sentiment on Monday, noting that the president was doing all he could to punish Russian President Vladimir Putin while “limiting the price impact to fuel pump”.
While a host of Western allies have joined the United States in imposing the first tranches of economic sanctions against Russia, the United States is so far alone in this latest ban. European countries are far more dependent than the US on Russian energy – in 2021, the US imported 700,000 barrels per day of Russian crude and oil, while the EU imported around 4.5 million barrels per day, PSAki said Monday.
The Biden administration, together with 30 other countries, last week announced plans to release 60 million barrels of oil from strategic petroleum reserves, including 30 million from the U.S. stockpile. The U.S. oil industry is also ramping up production, though some executives warn it will take some time for the market to recover.
Many oil and gas companies have been skittish about dropping wads of cash on new drilling after the coronavirus pandemic devastated demand and earnings. Supply chains have slowly accelerated, leading to higher prices. The Russian war in Ukraine has added to the disruption. Now the political decision to cut off Russian oil – a major financial lifeline for Putin’s regime – will add to the crisis even further.
But by calling on oil and gas producers to turn on the tap, the Biden administration is walking a tightrope on its climate change message. Biden wants to halve greenhouse gas emissions, compared to 2005 levels, this decade. The Ukraine crisis, however, has highlighted the delicate balance between maintaining national security and shutting down fossil fuels, which are largely responsible for global warming.
The official noted that the Biden administration was not abandoning this view, saying reducing dependence on fossil fuels would limit exposure to price swings. But the official said he had to “make this transition as orderly as possible”. This means bringing in other energy producers to strategically release oil from reserves and encouraging countries with spare production capacity to increase drilling.
Still, the official acknowledged the complications the Russian war in Ukraine has posed for allies in Europe who import 4.5 million barrels of Russian crude oil and petroleum products every day. Many of these nations are not oil and gas producers like the United States.
“We consulted closely with European allies, but we did not expect them and did not ask them to join us,” the official said. “The United States is in a position to take this step because of our strong energy production and domestic infrastructure.”
Biden’s announcement responds to calls from Ukrainian President Volodymyr Zelenskyy, who has repeatedly pleaded with Western officials to halt Russian oil exports under unified economic sanctions. Zelenskyy equated buying Russian oil with “giving money to a terrorist”.
Vice President Kamala Harris will travel to Poland and Romania on Wednesday to discuss the West’s response to the Russian invasion and the ensuing refugee crisis. In the first 10 days, 1.5. Millions of Ukrainians have been displaced, making it the fastest growing refugee crisis since World War II. Biden stressed that the United States intends to help, so that the responsibility for caring for refugees “does not fall entirely on European countries bordering Ukraine.”
The United States and its global allies have sanctioned Russia’s largest banks, as well as Russian oligarchs and their families, and moved to block financial institutions from SWIFT, a global financial transaction network. Biden touted the sanctions as having successfully destabilized the Russian economy, noting that the ruble is now worth less than a US penny.