U.S. banning Russian oil imports as Biden warns of ‘costs’

President Joe Biden announced Tuesday the U.S. will ban all Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine, but he acknowledged it will bring costs to Americans, particularly at the gas pump.

The action follows pleas by Ukrainian President Volodymyr Zelenskyy to U.S. and Western officials to cut off the imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion. Energy exports have kept a steady stream of cash flowing to Russia despite otherwise severe restrictions on its financial sector.

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

He warned that Americans will see rising prices, saying, “Defending freedom is going to cost.”

Biden said the U.S. was acting in close consultation with European allies, who are more dependent on Russian energy supplies. The European Union this week will commit to phasing out its reliance on Russia for energy needs as soon as possible, but filling the void without crippling EU economies will likely take some time.

Unlike the U.S., which is a major oil and gas producer, Europe relies on imports for 90% of its gas and 97% of its oil products. Russia supplies 40% of Europe’s gas and a quarter of its oil. The U.S. 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. Though Russian oil makes up only a small part of U.S. imports, Biden has said he was reluctant to ban it, cutting into supplies here and pushing gasoline prices higher.

Inflation is at a 40-year peak, fueled in large part by gas prices, and that could hurt Biden heading into the November midterm elections. He said two weeks ago that he wanted “to limit the pain the American people are feeling at the gas pump.”

Gas prices have been rising for weeks due to the conflict and in anticipation of potential sanctions on the Russian energy sector. The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday, rising by 10 cents in one day, and up 55 cents since last week, according to auto club AAA.

Biden said it was understandable that prices were rising, but cautioned the U.S. energy industry against “excessive price increases” and exploiting consumers.

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

In 2021, the U.S. imported roughly 245 million barrels of crude oil and petroleum products from Russia—a one-year increase of 24%, according to the U.S. 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.

Bergmann said it wasn’t surprising that the U.S. was able to take this step before European nations, which are more dependent on Russian energy.

“All of this is being done in coordination, even if the steps are not symmetrical,” he said. “We are talking to them constantly.”

The news of Biden’s decision Tuesday was first reported by Bloomberg.

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 declared, “Ban it.”

On Monday, Democrats on the powerful Ways & Means Committee posted, then removed, an announcement on a bipartisan bill to ban Russian oil imports and slap further trade sanctions on the country, according to an aide, because of pushback from the White House to acting before Biden had made his decision.

Pelosi told Democrats in a meeting early Tuesday that the House would go forward with a vote on legislation to ban the Russian oil imports, according to a person granted anonymity to discuss the private caucus meeting.

“The United States economy can fully handle any of the challenges associated with higher oil prices,” Jason Furman, a Harvard professor and former top economic adviser to President Barack Obama. “But it will bring some challenges. We’re going to have higher prices at the pump, and there’s no way around that.”

Before the invasion, Russian oil and gas made up more than a third of government revenues. Global energy prices have surged after the invasion and have continued to rise despite coordinated releases of strategic reserves, making Russian exports even more lucrative.

As a consequence of Russia’s invasion of Ukraine, the U.S. and international partners have sanctioned Russia’s largest banks, its central bank and finance ministry, and moved to block certain financial institutions from the SWIFT messaging system for international payments.

But the rules issued by the Treasury Department allow Russian energy transactions to keep going through non-sanctioned banks that are not based in the U.S. in an effort to minimize any disruptions to the global energy markets.

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

“They told me in the talks that they will neither demand nor ask that Germany do the same. But I would extrapolate from that for us, and for me, that we need as soon as possible to create the possibility to take similar measures.”

While Russian oil makes up a small amount of overall U.S. energy imports, the U.S. could replace Russian crude with imports from other oil-rich nations, but that could prove politically problematic.

Key U.S. senators are warning the Biden administration from seeking any oil import deal from the Nicolas Maduro regime in Venezuela.

“The Biden administration’s efforts to unify the entire world against a murderous tyrant in Moscow should not be undercut by propping up a dictator under investigation for crimes against humanity in Caracas,” said Sen. Bob Menendez, D-N.J., the chairman of the Foreign Relations Committee, in a statement late Monday. “The democratic aspirations of the Venezuelan people, much like the resolve and courage of the people of Ukraine, are worth much more than a few thousand barrels of oil.”

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

18 thoughts on “U.S. banning Russian oil imports as Biden warns of ‘costs’

    1. We never were? Not sure what makes you think we “gave up” being energy independent last year.

    2. Clark, you really should try to inform yourself in these matters. The United States has imported approximately 7 to 9 million barrels of oil per day for the last 10 years. Nothing has changed in that stance in the last year.

  1. I agree Clark! In 1991 when Desert Storm kicked off gas was less than a $1/gallon and then spiked because of the war. We were assured it would resume to pre war prices and then a funny thing happened….it never went down. I doubt we will ever see sub $3/gallon gas again. If the US only imports a small portion of oil from Russia, why exactly did gas spike overnight to $4.25??

  2. Biden needs to get realistic that energy independence is essential not only to our economy but also to our national security. Why can the administration not put politics aside and do what is best for the citizens and our security? Common sense is not so common.

  3. Uncap US production and open Keystone XL to increase supply and dampen the market. Prices will right size at home and devalue the Russian product.

    1. Matthew thank you for this. Republican Presidents open the pipeline, Democratic Presidents close them. We have plenty of oil in the US, Biden needs to release it to the people who own it…The America People!

    2. There are over 9,800 unused oil drilling permits in the U.S. Time to stop peddling this nonsense.

  4. I expect our Democratic friends will now try to blame the entire increase in prices on our efforts to punish Russia. But don’t be fooled, this was more than a year in the making.”

    1. But….but….no more mean tweets, Charlene. Whaddya’ want, no mean tweets or $2.49 gas? You can’t have both.

      Have’t you noticed how polite, civil, and pleasant United States discourse has become since Inauguration Day 2021…why, it’s a whole different country, singing Kum-Bah-Yah around the campfire.

  5. Its a start but why not allow us to go back and produce at the levels under the previous administration? I am all for being as Green as possible and want to keep moving in that direction but curtailing our ability to be less dependent on other countries while we work our way that direction only makes us more vulnerable. Lets get back to where we were previously while still pursuing the advancement of the Green policies.

  6. Administration keeps saying there are thousands of approved lease the our oil companies will not develop.
    Why would they if the Dems will not assure that after investing hundreds of millions to do that, Biden won’t allow them to reach a return on the investment. Someone needs to ask the petroleum companies instead Jen Psaki

    1. …which is 7 million more American citizens’ votes than the election loser got.

  7. The good news is that increased gas prices will drive continued development toward oil independence! Hard for new technologies to move forward when gas is cheap – like during the COVID period.

  8. New technologies and petroleum based fuels are not mutually exclusive. Throw open oil and gas production by drastically reducing or eliminating regulations. Produce record amounts of fossil fuels thereby driving the price down substantially. Then increase the fuel tax rate modestly … to realize record revenues on slightly higher fuel tax rates combined with record volume of fuel taxed. Use the substantial increased tax revenues to fund new technologies development. “Low fuel prices that fund new technologies development”.

  9. Aren’t we all so virtuous! We are letting a MANIAC drive us to bankruptcy so that we can all feel good about Ukraine and sticking it to Putin. Before the war in Ukraine even started, Biden had caused our gas prices to go up by $1.14 a gallon. This guy is pathetic and so is every other politician that goes along with it, be Democrat or Republican. This next year we will be examining ALL OF YOU!

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}