As oil prices skyrocket due to the Russia-Ukraine war, President Joe Biden is still refusing to stop buying Russian oil.
Instead, the administration is happy to simply keep sanctioning Russian banks and oligarchs, hoping that will do the trick.
The White House is against the idea of banning Russian oil imports and warned that doing so could further increase the already high gas prices, The Hill reported.
“Our objective and the president’s objective has been to maximize impact on President Putin and Russia while minimizing impact to us and our allies and partners,” White House press secretary Jen Psaki said at a briefing.
So the U.S. will keep buying Russian oil, but sanctioning everything else, like the individual oligarchs, hoping that the sanctions will cripple Russia enough into stopping the war on Ukraine.
Oil exports are Russia’s economic lifeline, as Russia is the world’s largest oil exporter.
Fossil fuels make up about 60 percent of the country’s exports. Russia was the world’s third-largest oil producer in 2020. It produced about 11 percent of the world’s total oil, Time magazine reported.
Russia’s primary customers are Europe, which takes up about 60 percent Russian oil exports, and China, which makes up about 20 percent, the Hill reported.
The U.S., on the other hand, only accounts for about 3 percent of Russia’s oil exports, Statista reported.
Do you think that the U.S. should sanction Russian oil?
It doesn’t make sense that Biden is so hesitant to cut off oil from Russia. Sure, giving Russian oil the American boot wouldn’t cripple Russia overnight (it’s a 3 percent difference), but refusing to sanction it doesn’t make much sense, either.
Yes, if Russian oil is cut off, gas prices might rise a bit, but not to astronomical levels. Besides, they are already high due to global panic over the war. Keeping Russian oil imports is not going to magically make gas prices go from $4 per gallon to $1 per gallon next week.
Paski tried to rationalize the hard line that the administration has taken against sanctioning Russian oil, but her explanation was weak.
“We don’t have a strategic interest in reducing the global supply of energy and that would raise prices at the gas pump for the American people around the world because it would reduce the supply available,” Paski said, The Hill reported.
“And it’s as simple as less supply raises prices, and that is certainly a big factor for the president at this moment. It also has the potential to pad the pockets of President Putin, which is exactly what we are not trying to do,” she continued.
However, the reason that oil prices are skyrocketing has almost nothing to do with the U.S. buying or not buying Russian oil.
European buyers turned to the Middle East for oil once the war began, the New York Times reported. This drove up prices and shifted the buyers and supplies in the market.
That is why the prices went up: It went up because of European shifts in buying. Essentially, because of this, the U.S. was going to have high gas prices and there was going to be a supply problem, regardless of the U.S. oil imports.
Paski’s point of padding the pockets of Putin also makes no sense. Russia is now discounting its oil prices in attempts to get people to buy again, the Times reported. But no one wants it, except for the U.S.
If anything, the U.S. is currently padding Putin’s pockets by continuing to import, while everyone else has started to turn to the Middle East.
To sum it up neatly, the Biden administration’s economic understanding of the American oil market and Russia’s role in it is flawed and miscalculated.