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BIDEN ACTS ON OIL BAN PRESSURES: President Joe Biden announced a ban today on all U.S. imports of Russian oil and natural gas today, seeking to impose maximum economic pressure on Russia for its violent and unprovoked invasion of Ukraine.
“We are enforcing the most significant package of economic sanctions in history,” Biden said at the White House, even as he stressed the administration’s commitment to keeping prices as low as possible for consumers.
“This is a step that we're taking to inflict further pain on Putin. but there will be costs as well here in the United States,” Biden said, calling the new actions a “painful blow” against Russia’s economy and its ability to fund its invasion of Ukraine.
Pain at home, too: Even so, Biden again warned Americans will likely face heightened gas prices because of the conflict, as he has been for weeks. “Defending freedom is going to cost,” he said.
His remarks come as gasoline prices in the U.S. rose today to an all-time high of $4.17 a gallon, according to AAA, a 10-cent increase from the previous day and a 6-cent increase from the previous record of $4.11.
In his remarks, Biden reiterated that Putin will bear responsibility for future “pain at the pump” for U.S. consumers––compounding price spikes that were already high due to inflation and increased demand. Biden noted that since Putin began his military buildup along the Ukrainian border, the cost of gasoline in the U.S. has increased by 75 cents. “And with this action, it's going to go up further,” he said.
“I said I would level with the American people from the beginning. [And] when I first spoke to this, I said ‘defending freedom is going to cost,’” Biden said. But, he said, “Republicans and Democrats alike have been clear that we must do this.”
But expect significant sticker shock in the months ahead: Already, inflation in the U.S. is at a 40-year high, with consumer prices spiking by 7.5% in January compared to the same month last year. Analysts are predicting that figure to rise even further––to 7.9% ––when the government releases its new numbers Friday.
While the U.S. is the world’s largest oil producer, it is also the largest oil consumer, as the AP notes––and at current levels, domestic crude will be unable to fill that void.
Congress at the lead: News of the announcement coincides with mounting pressure on the administration by Congress to ban Russian crude imports and energy products by lawmakers.
Proposals to that end have been wide-ranging and bipartisan over the last week and a half. Sens. Lisa Murkowski and Joe Manchin introduced the Ban Russian Energy Imports Act last week. Eighteen senators total from both parties had signed on to the bill as of last Thursday, per Manchin’s office, and Reps. Josh Gottheimer and Brian Fitzpatrick introduced a companion bipartisan bill in the House.
Meanwhile, House Speaker Nancy Pelosi told members in a letter Sunday night that the House was “exploring strong legislation” on the issue and planned to hold a House vote as early as tomorrow.
Democratic Sen. Ed Markey announced his own proposal to ban Russian oil imports, while House Ways and Means Committee Chairman Richard Neal and Ranking Member Kevin Brady, alongside Senate Finance Committee Chairman Ron Wyden and Ranking Member Mike Crapo, have been working on a deal of their own.
The ban follows punishing rounds of sanctions issued by the U.S. and European allies in response to Russia’s aggression in Ukraine, though such penalties have so far steered clear of targeting Russia’s oil and gas sector, amid fears of driving prices even higher.
The prequel: Biden’s decision to move unilaterally on a Russian oil ban follows days of behind-the-scenes planning by administration officials, who discussed the effort at length with both European allies and oil and gas industry officials as they explored how to buffer the U.S. economy––to the extent possible––from residual shock. “Administration officials have been discussing with the U.S. oil and gas industry how a ban could affect American consumers and global energy supplies,” Bloomberg reports.
Keeping costs as low as possible remains a priority: The White House has explored a wide range of plans in recent days that could help fill the void left by Russian energy imports, the Washington Post reports, noting that such measures have “included the massive scaling up of production of ‘heat pumps’ for Europe, an additional release of U.S. oil reserves, and a gas tax holiday to protect American consumers[.]”
“The White House is also considering a renewed push for its clean energy agenda as part of an attempt to move America away from its dependence on authoritarian petrostates,” The Post adds.
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US OUT ON A LIMB: Biden said Europe, which depends much more heavily on Russian energy supplies, will not be joining in an import ban, though the administration has said it will be working in “close coordination” with European allies as it moves to slowly phase out Russian energy supplies. (Russia supplies roughly 40% of Europe’s natural gas and is its main supplier of crude oil and hard coal, making an abrupt cutoff nearly impossible for the bloc.)
To underscore that unity, Biden met virtually yesterday with German Chancellor Olaf Scholz, British Prime Minister Boris Johnson, and French President Emmanuel Macron to discuss coordination on sanctions. EU leaders will also meet Thursday in Versailles, where they will commit to reducing its dependence on Russian energy supplies.
“We're moving forward with this ban with an understanding that many of our European allies and partners may not be in a position to join us,” Biden said today.
The U.S., Biden added, “produces far more oil domestically [than] all the other European countries combined. In fact, we're a net exporter of energy,” he added. “So we can take this step when others cannot.”
Biden said that the U.S. was “working closely” with European allies and other partners as they seek to build out a long term strategy to incorporate new energy alternatives.
According to Bloomberg, the Biden administration yesterday “asked Pelosi to hold off amid escalating concern that it was important politically for the White House to move first .... The administrative approach also gives Biden more flexibility to adjust import controls later if tensions ease or prices rise precipitously.”
MORE FROM BIDEN: In his White House remarks, Biden sought to highlight the blow to Russia’s economy that has been inflicted by previous rounds of sanctions, saying that such penalties have caused Russia’s economy to “crater.”
“Putin seems determined to continue on his murderous path, no matter the cost,” Biden said, noting that the cost of a Russian ruble is now worth less than one American cent.
“Russia may continue to grind out its advance at a horrible price. But this much is already clear: Ukraine will never be a victory for Putin,” he added. “And if we do not respond to Putin's assault on global peace and stability today, the cost of freedom and to the American people will be even greater tomorrow.”
OIL MARKETS SHOWING NO SIGN OF EASE: Global oil markets saw yet another morning of price volatility. Brent crude is up above $127 per barrel as of this writing. West Texas Intermediate crude is trading above $123 per barrel.
US-VENEZUELA OIL TALKS WARM UP: Venezuelan President Nicolas Maduro spoke positively of talks with the United States about the prospects of his country providing oil to ease the strain on American consumers, the Financial Times reports.
“We agreed to work on a forward-looking agenda,” Maduro said yesterday. “We’ll press ahead with the conversations, the co-ordinations, and a positive agenda for the government of the United States and the government of the Bolivarian Republic of Venezuela.”
The ballooning cost of crude oil and need for contingency planning in response to the Russia-Ukraine war has sent the Biden administration searching for solutions in unlikely places.
The Trump administration imposed multiple rounds of sanctions on Venezuela citing human rights abuses by Maduro’s regime, all of which blunted oil exports from what has historically been a global petroleum heavyweight.
Press Secretary Jen Psaki said yesterday the administration was not overlooking Maduro’s transgressions in sending a delegation to talk oil.
“The purpose of the trip that was taken by administration officials was to discuss a range of issues — including, certainly, energy security — but also to discuss the health and welfare of detained U.S. citizens,” Psaki said.
A fellow Democrat’s warning: Senate Foreign Relations Chairman Bob Menendez cautioned the Biden administration against doing anything that would enrich Maduro’s regime, calling him “a cancer to our hemisphere.”
“We should not breathe new life into his reign of torture and murder,” he said yesterday.
EPA INTRODUCES HEAVY-DUTY VEHICLE STANDARDS: The EPA proposed tougher standards on heavy-duty vehicles yesterday designed to reduce air pollution and greenhouse gas emissions and to grow uptake of electrified vehicles.
EPA said the proposed action would reduce nitrogen oxide emissions from trucks by as much as 60% in 2045 and estimated it could reduce the incidence of asthma children, as well as the number of premature deaths and hospitalizations associated with pollution from vehicles.
Green finance group wants more: Carol Lee Rawn, who is senior director of transportation at green finance group Ceres, called the standards a “good first step” but said EPA should be more aggressive.
“We need to strengthen them as well as accelerate the rulemaking for the next round of standards in order to ensure rapid electrification of the sector,” she said.
UN NUCLEAR HEAD WORRIED ABOUT UKRAINE’S REACTORS: The head of the United Nations’s nuclear agency said there’s an “urgent need” for Russia and Ukraine to meet over Ukraine’s nuclear fleet, Breanne reports.
Rafael Grossi, director general of the International Atomic Energy Agency, urged Russia and Ukraine yesterday to reach an agreement on the operation of Ukraine’s nuclear power plant facilities — a step he said has become increasingly urgent as Russian troops escalate their attacks in Ukraine.
“We should not be losing time,” Grossi said. “Almost every day, there is a new episode.”
His comments came just hours after Russian shelling destroyed an atomic physics lab in Kharkiv, including a neuron generator inside the facility. IAEA officials said they did not record a rise in radiation from the site.
SOLAR INDUSTRY URGES ‘NO’ ON PETITION FOR IMPORT DUTIES: Solar firms are banding together and asking the Commerce Department to reject a domestic solar manufacturer’s petition that the government impose duties on solar cell and module imports from Asian countries.
California-based solar cell manufacturer Auxin Solar Inc. filed a petition with Commerce last month, asking that it put duties on competitor solar imports from Cambodia, Thailand, Vietnam, and Malaysia. Auxin Solar argued the imports are circumventing existing duties on Chinese solar products (see our coverage of the petition and initial industry response here.)
In a letter yesterday to Secretary Gina Raimondo, more than 200 firms and the Solar Energy Industries Association said the petition failed to meet the department’s threshold for consideration and should be dismissed.
“The petitioner seeks to game the system by imposing cost prohibitive duties on its competitors, including its fellow domestic module manufacturers who depend on imported cells from Southeast Asia, without due process and a formal USITC injury investigation,” the letter said.
It also said even just formal consideration of the petition by the department would significantly injure U.S. solar deployment, noting solar cells and modules from those nations account for more than 80% of solar imports.
In general, U.S. solar manufacturers that have supported this and other petitions say such anti-dumping and countervailing duties are necessary to grow the domestic solar supply chain, but SEIA says the domestic manufacturing base is unable to produce products at scale needed to meet demand and that duties are not a means of growing manufacturing.
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