Lights illuminate a gas drilling rig on the Gazprom Chayandinskoye oil, gas and condensate field, a resource base for the Power of Siberia gas pipeline, in the Lensk district of the Sakha Republic, Russia, on Oct. 13, 2021. (Andrey Rudakov/Bloomberg)
The White House said Friday that it is weighing a ban on imports of Russian oil, amid growing calls in Congress to act.
White House press secretary Jen Psaki said the administration is “considering a range of options” but does not want to disrupt the global energy supply or increase gasoline prices.
“What we know is that, you know, from the U.S. economy, we don’t import a lot of Russian oil, but we are looking at options that we can take right now if we were to cut the U.S. consumption of Russian energy,” Psaki said. “But what’s really most important is that we maintain a steady supply of global energy.”
She later added that “certainly the rising price of oil and the impact on gas prices is one we are focused on.”
The clamor in Congress for a ban has come from both parties, including from House Speaker Nancy Pelosi, D-Calif.
Imported Russian crude makes up only a small fraction of the U.S. oil market, but if countries in Europe and elsewhere adopted similar sanctions, it could cause gas prices to spike.
At the moment, many international oil traders are shying away from buying Russian oil. One said that prices were $25 to $30 a barrel lower for Russian oil than for comparable grades of oil from other countries. That gap could grow if Russia runs out of oil tanker space. However, even the discounted price remained very high Friday, as the price of the benchmark Brent crude closed at more than $118 a barrel.
“We think from a supply-and-demand standpoint [the ban] is not a big deal. Russia will sell that amount of crude and product elsewhere. We will be able to buy somewhere else,” said Robert McNally, president of Rapidan Energy Group, a consulting firm. But he warned that traders would point to the United States and say: Who’s next? “There could be a perception that this is snowballing,” he said.
Shell, which already said it would exit joint ventures with Russia’s state-owned Gazprom and the NordStream II pipeline, said that it had stopped “most activities involving Russian oil.” A Shell spokesman said the company plans “to further reduce our use of Russian oil as alternative crudes become available.” The company said, however, that currently “a tight market presents a relative lack of alternatives.”
Support for measures cracking down on Russian energy imports quickly gathered bipartisan steam this week on Capitol Hill.
While the initial push was led by Republicans — who have paired their calls for an import crackdown with demands for increased domestic oil and gas production, along with the rollback of Biden climate initiatives — by Thursday even Pelosi had voiced support for the idea.
“I’m all for that,” Pelosi said when asked about Russian oil imports at her weekly news conference. “Ban it.”
The pressure on President Joe Biden was amplified Thursday by a bipartisan group of 18 senators who introduced legislation flatly banning Russian energy imports, led by Sens. Joe Manchin, D-W.Va., and Lisa Murkowski, R-Alaska, both members of the Senate Energy and Natural Resources Committee.
“This is a time for America to stand tall,” Manchin told reporters Thursday. “The world depends on us. Energy has been weaponized, and we have the ability to basically counter that weapon.”
Manchin said that “if there was a poll being taken and they said, ‘Joe, would you pay 10 cents more per gallon to support the people of Ukraine and stop the support of Russia?’ I would gladly pay 10 cents more per gallon.”
But Democratic support for ending Russian energy imports extended well beyond Manchin, the most oil-and-gas-friendly Democrat, to lawmakers with significant environmental bona fides.
A ban, Sen. John Hickenlooper, D-Colo., argued Thursday, would “accelerate the transition we’re already seeing into sun-driven energy and wind-driven energy, water-driven energy — that acceleration is only going to help make us more independent from these types of situations.”
And Sen. Rob Portman, Ohio, a Republican with close relationships across the aisle, pitched a Russian oil ban as an environmentally friendly move: “Who thinks that the Russian oil is being produced in a more environmentally sound way than American oil?” he told reporters Thursday. “It’s much dirtier in terms of how they produce it, then they got to send it here by ship, which creates a lot of CO2. So the notion that somehow this is going to be bad for the environment if we cut off Russian oil — just the opposite.”
But some Democrats continued to privately fret that they were walking into a political box canyon by embracing a policy that would raise already surging energy prices without meaningfully hurting Putin’s income streams, given that Russia’s prime markets in China and India are likely to remain open.
Meanwhile Europe could feel the brunt of an international ban. Overall, Russia exports about 5 million barrels a day of crude oil, and about 60% of that goes to Europe. “Crude [prices] will keep rising until the risk goes away or there’s a recession,” McNally said. “That’s the brutal math of it.”
Senate Majority Leader Chuck Schumer, D-N.Y., is “looking at the proposal,” spokesman Alex Nguyen said.
Republicans, meanwhile, have pushed Biden and congressional Democrats on multiple fronts to move forward with the ban, while signaling that they have no plans to let up on their attacks on Biden’s climate policies and his handling of inflation.
Murkowski called on Biden to “embrace the role that we can take on as a full energy producer” and openly call on U.S. oil and gas companies to ramp up production, while removing regulatory obstacles that his administration has championed.
“But right now, the signal from this administration is, we’re going to keep ours in the ground and we’re going to count on it from somewhere else, and now we’re realizing we’ve been counting on Russia to help us with that,” she said. “That signal needs to be uncrossed.”
