Mar 5, 2022 - Politics & Policy

Scoop: Biden officials pressured Dems on Russia oil ban

Germans are seen calling for a Russian oil and gas boycott in protest of the Ukraine invasion.

A demonstrator in Germany called for a Russian oil and gas boycott on Thursday. Photo: Henning Kaiser/picture alliance via Getty Images

Biden administration officials pressured some Democratic senators not to support bipartisan legislation by Sens. Joe Manchin (D-W.Va.) and Lisa Murkowski (R-Alaska) that would ban oil and gas imports from Russia, Senate Democratic aides told Axios.

Why it matters: The quiet lobbying campaign reveals a White House intent on preserving President Biden's authority to decide what costs to impose on Russia for invading Ukraine — and on what timetable.

  • It also indicates his advisers' frustration with congressional efforts to box him in.
  • The White House on Friday signaled it is open to reducing the import of Russian oil — without saying exactly how.

The big picture: A ban could translate to higher prices at the pump in parts of the U.S. and increase inflation, a key concern for Biden.

  • It also could force other countries to follow suit — sending oil prices soaring around the globe. Russia, the world’s third-largest oil producer, sends most of its petroleum products to Europe and Asia.

By the numbers: Oil from Russia accounted for roughly 3% of U.S. crude imports in 2021.

  • It's mostly imported in Hawaii and the coasts, where refiners don’t have access to the pipelines connecting the big domestic oil fields in places like the southwest's Permian Basin.
  • Energy analysts and economists disagree about how much of a price spike an import ban would generate.

Driving the news: Cecilia Rouse, chair of the Council of Economic Advisors, told reporters on Friday: "We are looking at options that we can take right now, if we were to cut the U.S. consumption of Russian energy, but what’s really most important is that we maintain a steady supply of global energy.”

  • That appears to be a shift from the White House's initial dismissal of the congressional effort to effectively impose an embargo on Russian oil for U.S. refiners.
  • Its behind-the-scenes lobbying effort earlier in the week appeared to be having mixed results. The Manchin-Murkowski legislation now has 20 co-sponsors.
  • Meanwhile, House Speaker Nancy Pelosi told reporters on Thursday about a ban, "I’m all for that — ban it."
  • Bloomberg reported on Friday that administration officials were in discussions with officials from the oil and gas industry on the effect a possible ban would have on prices paid by the American consumer.

A spokesperson for the White House declined to comment.

Between the lines: Senate aides told Axios that the White House's response to the Manchin-Murkowski effort looks similar to its requests last week for lawmakers to tamp down demands to expel Russia from the SWIFT financial system — a decision the Biden administration ultimately took.

What they're saying: Michael McFaul, who served as U.S. ambassador to Russia under President Barack Obama, said Friday that he expects the practice of importing Russian oil to "change soon."

  • "The United States should not be importing Russian oil. Period," McFaul said during an online panel discussion about the Russian invasion of Ukraine moderated by Axios' Jonathan Swan.
  • "I understand inflation. I understand the arguments. But there's no ethical or moral reason that we should be doing that, and I expect that to change soon."

Many U.S. refiners have effectively stopped purchasing oil from Russia, as they're concerned about how to pay for it if many Russian entities are already under banking sanction.

  • Preliminary data from the Energy Information Agency shows that U.S. imports dropped to zero in the last week in February.
  • On Friday, Shell PLC, which is headquartered in the United Kingdom, bought Russian crude at a steep discount, nearly $30 a barrel below international benchmarks, according to the Wall Street Journal.
  • U.S. gas prices already are running as high as they were in 2014 due to an economic resurgence amid tight global supplies, Axios' Andrew Freedman notes.

The bottom line: The White House has always wanted to keep some sanctions in its back pocket as leverage on Russia and to delay, if not avoid, pain to American consumers.

  • But with international and domestic opinion turning so strongly against Russia, Biden may get pressed to impose sanctions ahead of schedule.
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