Biden announces Russian oil import ban and warns gas prices could increase even more

President Biden on Tuesday announced a ban on U.S. imports of Russian oil and gas — the latest move to try to punish Moscow for invading Ukraine.

"The United States is targeting the main artery of Russia's economy," Biden said. "That means Russian oil will no longer be acceptable at U.S. ports, and the American people will deal another powerful blow to Putin's war machine."

The ban also applies to U.S. imports of Russian liquefied natural gas (LNG), products made from oil, and coal. New purchases are to be ceased immediately, but U.S. buyers with existing contracts for Russian energy have 45 days to wind down deliveries.

Biden called the prohibition a critical step to punishing Russian President Vladimir Putin but said as a result, Americans should be prepared to face further price hikes at the pump.

Already, the cost to fuel up has spiked since the early days of Russia's invasion of Ukraine, leading to historic gas prices across the country.

"Defending freedom is going to cost. It's going to cost us as well in the United States," Biden said.

Biden pledged to do "everything I can to minimize Putin's price hike here at home" and said that lifting environmental regulations would not boost domestic energy production.

Instead, he said that oil and gas companies have leased millions of acres of U.S. land and received permits to drill but have decided not to use them for production.

"They can be drilling right now, yesterday, last week, last year," he said.

After Biden's address, a senior White House official said the Biden administration plans to continue working with major energy consumers to consider releasing more emergency reserves — and will continue urging oil producers with spare capacity to produce more oil.

But the move to cut off Russian oil reserves has redoubled the administration's push to wind down Western dependence on fossil fuels altogether.

The official said the United States and allies need to reduce dependence on fossil fuels and transition to more renewable sources of energy to avoid this kind of situation in the future, despite the short-term push to pump more oil.

The ban marks a divergence in U.S. sanctions from those of its allies and partners

Until now, Washington had worked in lockstep with European allies to carve out exceptions to its banking sanctions for energy transactions, recognizing the potential for disruptions to hike prices for consumers.

Biden said he made the decision after communication with U.S. allies, particularly those in Europe, and he realized many of Russia's buyers did not have the energy resources to cut off oil from Moscow.

"We will not be part of subsidizing Putin's war," Biden said. "We can take this step when others cannot."

Europe imports six times more oil from Russia than the United States does.

The White House had initially resisted the move, saying it was trying to avoid actions that would reduce global energy supplies or push up prices for Western consumers even more. "We don't have a strategic interest in reducing the global supply of energy," White House press secretary Jen Psaki told reporters last week.

A senior U.S. administration official on Tuesday told reporters that the United States had not asked its allies to adopt a similar ban, but the official declined to say whether allies asked the White House to not take this step.

The cut-off extends to the financial sector as well. Americans are now banned from investing in Russia's energy sector, including through foreign consortiums that may invest in the country.

There was a bipartisan push from Congress for the ban

Even though the United States counts on Russian oil for less than 10% of its imports, those sales were too much for many Democrats and Republicans in Congress, who pushed for the ban — which was among the requests for assistance from Ukrainian President Volodymyr Zelenskyy during a video call with U.S. lawmakers over the weekend.

"We are going to continue to consult with, continue to convey where our plans, where our discussions are here internally with the Europeans," Psaki said on Monday ahead of the announcement. "But I would look at it through a different prism than past coordinated efforts."

Oil and gas prices have soared

Oil prices hit a 14-year high on Monday ahead of the announcement, and U.S. gasoline prices have now hit a record. The AAA puts the national average at $4.17 per gallon, topping the previous high of $4.11 in 2008.

Even before Russia invaded Ukraine, inflation — at its highest level in decades — had become the top issue on the minds of voters ahead of elections this November that will determine whether Democrats hold on to their narrow majority in Congress.

"The decision today is not without cost here at home. Putin's war is already hurting American families at the gas pump," Biden said Tuesday.

Biden had strong words for oil and gas companies, as well as the financial firms backing them, saying that while energy prices will rise with the ban, it is "no excuse to exercise excessive price increases or padding profits."

About the current state of the invasion, Biden said, "This much is already clear: Ukraine will never be a victory for Putin."

U.S. officials have talked to Saudi Arabia and Venezuela about energy

American officials have been working behind the scenes to try to boost global energy supplies, starting during the weeks leading up to the invasion. The United States and other major energy consumers also jointly released emergency stocks of oil to try to take the edge off markets.

U.S. officials visited Saudi Arabia to try to urge the kingdom to pump more oil. And talks aimed at reviving the Iran nuclear deal have led to optimism that it could also lead to a resumption in trade for barrels of Iranian oil kept off the market by sanctions.

Over the weekend, U.S. officials took the extraordinary step of visiting Venezuela's Nicolas Maduro — a heavily sanctioned authoritarian leader whom Washington does not even recognize as the country's legitimate president — to talk about energy security. The United States has sanctions blocking dealings with the country's oil company and central banks. Most of Venezuela's remaining oil exports are going to India and China, with help from Russia.

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