President Joe Biden announced on March 8, 2022, that the United States and its allies will be "targeting the main artery of the Russian economy" by banning imports of "oil, gas, and energy" from Russia. Biden noted that this decision has "strong bipartisan support" in the U.S. and that it was achieved in "close consultation with allies."
Adding that this is part of "the most significant package of sanctions in history," Biden stated that "the Russian economy is cratering." In this vein, he noted that the value of the Russian ruble (RUB) has dropped by about 50% since Russia's war on Ukraine began, leaving the Russian currency worth less than 1 U.S. cent.
- President Biden announced a ban on imports of Russian oil, natural gas, and coal on March 8, 2022.
- European allies are joining in the effort.
- Biden said that this is "targeting the main artery of the Russian economy" to hamper Russia's ability to wage war on Ukraine.
- Biden urged moves toward energy independence in the U.S. and Europe.
- While noting that U.S. oil production is at an all-time high, he urged development of "clean energy."
- He issued a stern warning against "profiteering or price gouging."
Heavy Burden for European Allies
Biden noted that, while the U.S. is a net exporter of energy products, many of its European allies are heavily dependent on imports from Russia. As a result, he suggested that there may be some exceptions to the ban regarding these countries. Nonetheless, he stated that his administration is working closely with these allies to reduce their reliance on energy imports from Russia.
'We Must Become Energy Independent'
Similarly, Biden stated that this turn of events is "a stark reminder that, to protect our economy, we must become energy independent." However, he clarified that he does not support a relaxation of environmental standards in order to stimulate increased domestic fossil fuel production. Rather, he made a pitch for increased efforts to generate "clean energy" and to stimulate a faster transition to electric vehicles.
Biden indicated that domestic oil production has increased during his term of office and is now at record levels. He noted that 90% of that production takes place on privately owned land and that there are 9,000 approved drilling permits on land for exploration that has yet to commence.
'No Time for Profiteering or Price Gouging'
Biden reiterated his earlier warnings that cutting off imports of Russian oil will be felt by consumers in the manner of higher prices. But he also noted that his administration "will do everything we can to minimize the impact." Specifically, he said that the U.S. and its allies are releasing oil from their strategic reserves (details below).
Biden sternly warned players in the energy markets, "Don't exploit the situation." He added that "this is no time for profiteering or price gouging."
'Ukraine Will Never Be a Victory For Putin'
Biden asserted his determination that "Ukraine will never be a victory for Putin." In the meantime, he urged Congress to pass a $12 billion package of assistance to Ukraine, including, by his count, the more than 2 million refugees created by Putin's aggression.
Biden hailed the emergence of a "private sector united against Russia's war of choice," as evidenced by a growing number of leading companies that are suspending business in Russia entirely on their own initiative as a protest against the war on Ukraine. He also noted that denying Russia access to semiconductors and other key technology products will damage it militarily.
U.S. Releases Oil From Strategic Petroleum Reserve
The U.S. Department of Energy announced on March 1, 2022, that it will be releasing 30 million barrels of crude oil from the U.S. Strategic Petroleum Reserve (SPR) to ensure an adequate supply of petroleum. This SPR release is part of a coordinated effort among the 31 members of the International Energy Agency (IEA). Other member countries of the IEA have agreed to release an additional 30 million barrels of petroleum from their own emergency reserves, bringing the total release to 60 million barrels.
According to the U.S. Energy Information Administration (EIA), the U.S. SPR held 580 million barrels of crude oil as of Feb. 25, 2022. The amount of oil held by the SPR has been declining in recent years, largely due to bills passed by Congress in previous years that have authorized drawdowns. In particular, acts passed in recent years already have slated a cumulative total of more than 160 million barrels for sale in federal fiscal years 2022 through 2027.
Releases of crude oil from the SPR can occur under four conditions: emergency drawdowns, test sales, exchange agreements, and nonemergency sales. The current release is the first emergency drawdown since 2011, when IEA members collectively released 60 million barrels in response to disruptions in Libya.