On March 8, 2022, President Biden announced his plan to ban the U.S. import of Russian oil. See here for full story. This story was originally published on March 7, 2022.
Gas prices could get higher—at least in the short-term—if the United States moves to ban imports of Russian oil in response to the country’s continued attack on Ukraine. In a letter to lawmakers over the weekend, House Speaker Nancy Pelosi said Congress is “exploring strong legislation” that would ban the import of Russian oil and energy products into the U.S.
“Our demand is going to continue strong, but that supply will go down, meaning that oil and gasoline prices will go up,” said Jay R. Young, CEO and founder of King Operating Corporation. King Operating Corporation is a privately owned oil and gas company in Dallas, Texas.
Just last week, Sens. Joe Manchin (WV-D) and Lisa Murkowsky (AL-R) introduced a bipartisan bill called the Ban Russian Energy Imports Act to immediately ban the import of crude oil, petroleum, petroleum products, natural gas, and coal from Russia.
But the White House has been hesitant to ban Russian oil imports.
“We don’t have a strategic interest in reducing the global supply of energy,” White House Press Secretary Jen Psaki said at a briefing last week.
In 2021, the U.S. imported more than 245 million barrels of crude oil and related products from Russia (nearly 8% of total U.S. crude oil imports) which equals nearly 672,000 barrels of oil per day.
The Russia-Ukraine conflict drove U.S. gas prices to $4.06 per gallon on Monday, their highest levels since July 2008, according to data from AAA. Oil prices continue to surge as well, with U.S. and international benchmark crude oil prices briefly hitting $130 and above this weekend—also the highest since 2008.
And a ban on Russian oil imports would have a ripple effect across many industries, especially the transportation sector, which in turn, could lead to rise in food prices.
Lawmakers, including Pelosi, say they are working towards keeping energy prices down.
“The Administration and the Congress remain laser-focused on bringing down the higher energy costs for American families and our partners stemming from Putin’s invasion,” Pelosi said in her letter.
During his State of the Union address, President Joe Biden announced that he is releasing 30 million barrels of oil from the U.S. strategic petroleum reserve to help stabilize gas prices. That amount will likely fall short, according to Young, who said that the U.S. currently does not have enough supply to make up for a potential gap with its own energy reserves.
“We need that in about a day and half,” Young said. “It’s like putting a band-aid on a gunshot wound.” The U.S. used nearly 20 million million barrels of oil per day in 2021.
Still, there’s a chance that relying on neighboring countries like Canada and Mexico could help offset the gap that banning Russian oil would create, and eventually stabilize gas prices, according to Cody Nehiba, PhD, an assistant professor of research at the Center for Energy Studies at Louisiana State University.
“Much of the difference would likely be made up by additional petroleum product imports from neighboring and other countries," Nehiba said in an email.
According to data from the U.S. Energy Information Administration (EIA), Canada supplied 51% of U.S. crude oil supply in 2021, with Mexico supplying 8.4%.
Nehiba said that while banning Russian oil would temporarily increase gas prices, local petroleum producers and other foreign suppliers would react to the ban and increase production.
"Gasoline prices may rise a bit more in the short run, but would level off as producers respond,” Nehiba said. “The market appears to believe that petroleum supplies will regain some normalcy going forward as the price of oil today is quite a bit higher than the price of oil for delivery in the future.”