Gas Prices Soar as Biden Bans Russian Oil Imports and Fails to Secure New Source

Friday, March 11, 2022

Paul Antonopoulos, independent geopolitical analyst

After President Joe Biden announced a ban on Russian energy imports on March 8, the price of gasoline in the US reached a record high. Although Biden promised Americans last year that gas prices would plummet, the reality is different since industries and transportation cannot operate as cost effectively without raw materials from Russia.

However, it appears that Biden miscalculated how responsive other oil producing countries would be to the new reality of Russia being knocked out of the American energy market. Saudi Crown Prince Mohammed bin Salman and the UAE’s Sheikh Mohammed bin Zayed al Nahyan declined requests to speak to Biden in recent weeks, who is attempting to build international support for Ukraine and contain rising oil prices.

“There was some expectation of a phone call, but it didn’t happen,” said a US official on the possibility of discussions between Prince Mohammed and Biden. “It was part of turning on the spigot [of Saudi oil].”

With this failure, Biden even humiliatingly hoped that Venezuela, one of the US’ most targeted and sanctioned countries, could plug the gap that the embargo on Russian energy has caused. It is recalled that senior American officials made a surprise trip to Venezuela on the first weekend of March in the hope that Venezuela could replace the 245,000 barrels per day (bpd) of crude oil the US was importing from Russia.

José Toro Hardy, a Venezuelan economist, told Forbes that “Venezuela can’t contribute much, its oil industry is destroyed.’’ According to Hardy, it would take about $250 billion of investment and seven to eight years to bring Venezuela’s production back to the 3.5 million bpd it was extracting in 1998. 

An unnamed official denied on March 9 that an American delegation traveled to Venezuela to discuss oil. But given the US’ continuous misinformation – even being indecisive on its claims of biological research facilities in Ukraine in recent days, it is difficult to believe that oil was not discussed, especially at a time when there is a massive gap in the American market and prices are breaking successive records.

On March 9, the cost for a gallon of fuel was $4.25, smashing the previous all-time record of $4.11 that was set in July 2008. Only a day later, the average price went up by 7 cents to $4.32 a gallon, reaching another all-time high.

Washington blames the Organization of the Petroleum Exporting Countries (OPEC+) for the price increase, especially as the group previously decided to increase oil production by 400,000 bpd, but gradually returned to normal after the biggest cut in history last year. In November 2021, Biden said “[This] is a consequence of, thus far, the refusal of Russia or the OPEC nations to pump more oil.”

Despite Biden’s complaint, Russia and Saudi Arabia took a unified stance against American pressure, arguing that production should not be increased because the risk of an oversupply of oil was real. Biden assured that an oversupply would not occur and promised to sharply reduce gas prices within the next three years – something that has seemingly already failed.

With crude oil being the main component of gasoline, accounting for 56% of fuel costs at gas stations, Biden’s decision to ban Russian energy imports has and will continue to hurt ordinary Americans. Although the US is also a great oil producer, Russia produces heavier and more sulfur-dense raw materials, which US refineries then process into gasoline, diesel and aircraft fuel.

The US previously relied on Russia to ensure a balance of supply and demand for refineries. This was especially the case when the Trump administration placed sanctions against Venezuela and ended the nuclear deal with Iran. Washington is now learning that it cannot sanction and then remove sanctions on oil producing countries at will and depending on their geopolitical priorities for the day.

It is no doubt that Biden’s Russian energy ban is bold, so bold in fact that the European Union is unwilling to reciprocate it. Instead, on March 9 EU foreign affairs chief Josep Borrell encouraged European citizens “to turn the heat down in their houses. Everybody needs to make an individual effort when it comes to cutting use.”

However, in the same week that he encouraged European citizens “to turn the heat down in their houses,” temperatures all across Europe, including in the warmer Mediterranean south, plunged into negative degrees.

In this context, former US President Donald Trump chimed in with his criticism of Biden’s decisions, saying: “Just confirmed that most of Europe won’t go along with the United States in boycotting Russian oil and gas. As usual the United States will be left out there alone, being taken advantage of by Europe, as we defend them, while we read in the Fake News how everyone has come together under Biden to fight Russia.”

Although the House passed legislation one day after Biden’s executive decision to ban US imports of Russian oil and other energy sources, it will be the Democrats who will face the full repercussions when the daily lives of the average American citizen is more economically challenging due to rising costs. In this way, Biden is making a huge political gamble, especially if Russia manages to survive the economic storm it is facing, something the Kremlin feels confident it can do.

Source: InfoBrics