President Joe Biden on Tuesday further increased the pressure against his Russian counterpart, Vladimir Putin.announcing the suspension of imports from Russia in oil, gas, coal and other derivatives.
(Read here: Russian military describes the invasion of Ukraine as ‘genocide’)
Without a doubt, this is one of the most severe sanctions taken by the Democratic administration since Moscow decided to invade Ukraine. two weeks ago, but one that could have serious repercussions not only in the United States but globally.
“Today I am announcing that we have focused on hitting the main artery of the Russian economy. And that means that we will not accept Russian oil in our ports and that the Americans, with this, are dealing another powerful blow to the war machine of Russia. Putin,” the US president said.
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Currently, the blocked Russian market accounts for about 8 percent of total US energy imports, of which 3 percent is in crude oil.
In parallel, the European Union (EU), a region that is much more dependent on Russian gas and oil (40 percent and 25 percent respectively), presented a plan to reduce up to two thirds of its imports throughout 2022.
In turn, the United Kingdom promised to gradually reduce imports of Russian oil until they are completely stopped by the end of the year, a period of nine months that will be dedicated to strengthening alternative supply routes, mainly through the United States, the Netherlands and the Middle East.
This decision does not come without cost here at home. Putin’s war is already hitting American families at the gas pumps.
Although the Biden administration had been considering this alternative for several weeks, it had refrained from taking the step given the current high cost of gasoline, its impact on rising inflation and the effects on domestic politics that both factors cause.
But the brutality of the Russian advance on Ukraine, added to bipartisan support for the decision, ended up precipitating the move.
In fact, this week two bills were presented in the House and Senate that had the support of Democrats and Republicans and that decreed the suspension of imports.
One such project would also authorize the disbursement of $12 billion in military and humanitarian aid to Ukraine, eliminate Russia’s trade preferences and seek its expulsion from the world trade organization.
President Biden emphasized, however, that the move will likely be painful for Americans.
“This decision does not come without cost here at home. Putin’s war is already hitting American families at the gas pumps. Since he invaded Ukraine the price per gallon has already risen 75 cents on the dollar and with this action it will rise even more. But I am going to do everything in my power to minimize the domestic increase that Putin is causing,” the president said on Tuesday after reiterating that the cost overrun was being caused by Russian aggression and not by decisions of his government.
Although the import of Russian oil to the US is small and its share of the world market is only 12 percent, Biden’s announcement – added to that of the Europeans – will surely trigger prices that are usually speculative.
After the measure, the value of a barrel of Brent already jumped another 7.7 percent and was trading at 132 dollars, an increase of 30 percent since Russia launched the invasion two weeks ago and more than 50 percent of the value to beginning of the year.
Something that will probably translate into a new jump in inflation, as transportation costs rise, and that can slow down economic growth.
According to Bob McNally, a consultant at Rapidan Energy Group, in a few weeks the price of a gallon could reach five dollars, an almost historical value that could grow more if the Europeans turn off the flow of Russian oil. “But that,” says McNally, “could trigger a global recession.”
For Chuck Shummer, leader of the Democrats in the Senate, although inflation and the surcharge of gasoline are a problem, in the long term it will be less when compared to the effort that is being made to defend freedom and oppose tyranny .
Even so, the Biden administration, aware of the moment, has been working on a series of initiatives to mitigate the impact.
On the one hand, they are studying increasing the production of heat pumps that would be exported to Europe to reduce their dependence on Russian energy sources.
(In other news: Biden orders embargo on US imports of Russian oil)
They are also releasing a portion of the US strategic oil reserves and are even discussing a tax deduction or credit for Americans to help them get through the storm.
The president also warned that he will intervene if gas and gasoline companies take advantage of the situation to speculate on prices and raise the cost of their products.
“To the oil and gas companies and the financial entities that support them, I say: We understand that this Putin war is causing a price increase. That is evident. But it is not an excuse to excessively increase prices or increase profits. at the expense of consumers. Russian aggression is costing us all. And this is not the time to speculate,” the president said.
At the same time, more immediate options have begun to be explored to control the increase in crude oil prices.
Among them, resorting to declared “enemies”, such as Venezuela or Iran, to fill the void that the new measures against Russia will cause.
For Biden, this is a very complex issue. Although the Republicans had been pressuring him to suspend imports, they also criticized him for the high costs of gasoline, an issue that immediately became electoral.
And while the opposition insists that the US must seek these new sources through new exploitation projects, these would not have an impact in the current situation since they would take time to produce results. Venezuela, which before the 2019 sanctions exported about 500,000 barrels of oil a day to the US, would be a more direct option, although insufficient, say analysts, to have an impact on the international price of crude oil.
The truth is that the rapprochements with other nations also make it clear that for Biden the crisis with Russia is not only existential but the axis that will define his presidency. And if to solve it he has to resort to regimes like that of Nicolás Maduro, it is something that he is willing to consider. Even if it costs Democrats votes in Florida.
SERGIO GOMEZ MASERI
TIME CORRESPONDENT
WASHINGTON
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