Republicans are laying a trap for Biden on Russian energy sanctions

Republicans are laying a trap for Biden on Russian energy sanctions

Catherine Rampell — Read time: 5 minutes

Columnist |

Republicans are setting a trap for President Biden. They’re demanding he take actions that will raise gasoline prices — with obvious plans to attack him politically after the prices rise.

In just a few days, there has been a dramatic change in political consensus over how to respond to Russia’s brutal invasion of Ukraine. Initially, policymakers appeared to go along with the Biden administration’s argument that they should carve energy-related transactions out of their sanctions.

That way, Russian President Vladimir Putin would suffer, but U.S. and European consumers mostly wouldn’t, the White House said. Lawmakers generally seemed okay with this setup.

But then the conventional wisdom rapidly shifted, at least on Capitol Hill.

Now, U.S. lawmakers say, we must cut Russia off from global energy markets. Why would Putin capitulate, after all, unless we block the life blood of Russia’s economy? Both Democrats and Republicans have insisted that we stop our (relatively small) energy imports from Russia, which might pressure our European allies (who depend much more heavily on Russian oil and natural gas) to do the same.

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Oil prices have already spiked in anticipation of some sort of embargo.

And what of previous concerns that disrupting global energy markets might harm Western consumers?

U.S. politicians could make the case that higher energy prices are a cost of defending freedom and democracy, upholding international law, resisting armed aggression. We’re not sending American sons and daughters into this war, they could say; instead, Americans’ sacrifice could be economic. We’ll pay more for gasoline — and perhaps other things, too — to help shoulder the burden of fighting Putin.

But that’s not the argument most U.S. politicians are emphasizing. Instead, they suggest there’s a free lunch to be had.

In recent days, Republicans (and some Democrats) have argued that the United States can apply sanctions to Russia’s energy sector while enduring virtually no economic pain at home, and without turning to unsavory alternative sources such as Venezuela. U.S. energy producers alone, they claim, can immediately ramp up supply to offset the shortfall. Big, Bad Government just needs to get out of industry’s way.

This is a fantasy — one born either of confusion about how energy markets work or a cynical desire to set up Biden.

For starters, it usually takes 10 to 12 months for a change in oil prices to lead to an actual change in oil production in the United States, according to John Kemp, senior market analyst at Thomson Reuters. That’s because there are many time-consuming steps involved, regardless of the regulatory environment: contracting a new rig, moving the rig onto the drilling site, recruiting workers and so on.

Already, U.S. oil producers have responded to the recent run-up in oil prices by taking steps to increase production. In January, there were 502 rigs drilling in this country for crude, according to energy research firm Wood Mackenzie. Today, there are 540. Unfortunately, any additional barrels that become available from these added rigs are months away.

The chief executive of the biggest U.S. shale oil operator recently told the Financial Times that domestic industry would be unable to replace lost crude supplies from Russia this year. In addition to all the usual factors, pandemic-related supply-chain constraints are slowing down development. Plus, investors burned in recent boom-bust cycles are pressuring shale operators to be more conservative about expansion this time around.

Republicans are ignoring all this. They’ve started arguing — with relatively little pushback — that if we can’t immediately replace lost Russian supply, it’ll be because of Biden’s supposed war on fossil fuels.

Despite his tough campaign rhetoric, though, Biden has been relatively gentle on the fossil fuel industry. Much to the dismay of climate hawks, his climate agenda is based almost exclusively on carrots, not sticks. As recently as January, he was outpacing Donald Trump in authorizing new drilling permits on public lands.

Republicans point to Biden’s decision to “shut down” the Keystone XL pipeline — but it was only 8 percent built when Biden revoked a U.S.-side permit for construction last year. Even if construction had continued, additional supply via this pipeline would still be years away.

“There’s no evidence that the regulatory environment is what has held the U.S. oil and gas sector back, and by extension, no indication that making the regulatory environment more permissive would generate additional production in the near term,” says Kemp.

It’s not clear what exactly Republicans think Biden could do to accelerate U.S. energy production in the short term, other than perhaps give a big pep talk.

Abruptly cutting Russia off from global energy markets would be painful for more than just the Russians. It could lead to a recession. It may nonetheless be the right thing to do — but we should all be clear-eyed about likely consequences.

And if Republicans truly believe our patriotic duty is to orchestrate a Western embargo of Russian energy, they should commit, today, to not politically exploiting the economic pain such sanctions will inevitably cause American consumers.

War in Ukraine: What you need to know

The latest: Russia is demanding Ukraine give up Crimea and a large slice of eastern Ukraine as a condition for Moscow to stop its attacks. Ukraine sought an emergency order from the ICJ, the U.N’s top court, that would require Russia to halt its invasion, but Russia did not show up.

The fight: Casualties are mounting in Ukraine — including civilians, while Moscow is facing allegations that it has used cluster and vacuum weapons. Russian forces fired mortar shells on a town on the outskirts of Kyiv, resulting in the death of at least eight people, including two children.

Maps: Russia’s assault on Ukraine has been extensive with strikes and attacks across the entire country. Much of the Russian onslaught has focused on Kyiv, but the eastern city of Kharkiv — with 1.5 million residents — is also crucial.

Protests: People around the globe took to the streets Saturday to condemn Putin and plead for peace Russia’ invasion has killed hundreds of Ukrainian civilians.

The response: Russia’s war could be a global economic “game changer,” with rising gas prices and shifting trade decisions suggesting change that will be felt for years. Meanwhile, in Russia, online access has been significantly curtailed by censors at home and businesses abroad.

How you can help: Here are ways those in the U.S. can help support the Ukrainian people as well as what people around the world have been donating.

Read our full coverage of the Russia-Ukraine crisis.