Will Stopping Russian Oil Work?
Terry H. Schwadron
March 7, 2022
As with so many other aspects of dealing with Russia over its invasion into Ukraine, cutting off the relatively small import of oil into the United States has emerged another of those easy answers that is likely not to have the intended effect of stopping Russia.
Stopping Russian oil imports is a theme earning growing bipartisan acceptance as part of “tough” response to war in Europe by squeezing Russian cash for its main export. Because of our political divisions, it has become a particular hammer for Republican critics to knock Joe Biden’s policies as underscoring perceived American weakness.
Acting on oil important might well be a good idea, but it seems based on some not-fully-baked thinking. Not only does Ukrainian President Volodymyr Zelensky begging for the ban, along with Western enforcement in the skies above Ukraine, it’s become the next achievable sanction for many and a convenient mark that “we’re doing something.”
In effect, the argument goes, Biden heightened concern about climate has halted oil and gas drilling on federal lands, in Alaska waters and off the coast and has left America vulnerable to even 3% or 4% of its oil imports coming from Russia — imports that are less than what we already export as an oil-producing country.
Senators Lisa Murkowski (R-Alaska) and Joe Manchin (D-W.Va.) are leading the effort to link the principled stand against Russian oil imports with proposals to re-open the country to immediate oil and gas drilling everywhere. Sen. Ted Cruz (R-Texas) even has a proposal to force the White House into the future to always guarantee U.S. energy independence. It’s almost taking advantage of the international fears to kick drilling into higher focus once again.
At base, the most vocal advocates say that if only we allow more oil drilling, we wouldn’t be finding ourselves vulnerable to the likes of Russian leader Vladimir Putin.
Plus, rising gas prices are real in this time of global uncertainty, expected fuel shortages in Europe, which is far more dependent on Russian oil, and the unwillingness of the Saudis, among others, to pump more oil in response. Lower prices at the pump to which we have become accustomed are going to worsen, as we saw over the weekend, though still be less than the price in other countries. And we all know that gas prices are key to election prospects, as Americas tend to focus primarily on personal experience over a wider understanding of global trends. It’s something to keep in mind as the discussion goes on.
Making Sense of a Ban
Any number of questions present themselves about what makes for common sense.
For openers, we should be able to see that Biden or any U.S. president has limited control over gas prices in this country, never mind around the world. And what we have before us is the immediacy of war: Policies about climate and new drilling platforms, however hastened, will take at least months or years and investment to kick in at the level that Drill, Baby, Drill proponents are spouting. At the other end of the spectrum is how increasing drilling will affect the climate problems we already are experiencing.
In its various ways, the current demand to stop Russian oil raises the question of whether that is an effective tool to use. It is not clear, for example, that Russia would take the 4% of oil it currently exports to the United States and simply sell it elsewhere, like, say, China or North Korea. The idea of stopping money for Russia just might mean stopping American money.
In 2020, the United States was a net energy exporter, sending 8.5 million barrels a day of petroleum in various forms to 174 countries and four U.S. territories. The U.S. imported about 7.86 million barrels per day; the Russian oil is 3% of that, not of the total amount of oil used in the U.S. In fact, most U.S. power plants now operate on natural gas, not oil altogether. Total U.S. petroleum production averages about 18.375 million barrels per day, with crude oil about twice the amount of natural gas.
Bloomberg Economics estimates that with its 500 active oil rigs running at current productivity levels, the U.S. can easily replace the Russian oil imports. At the 2014 peak, about 1,600 rigs were in use.
Part of the calculus here, however, is that we also want to help Europe. Volatility in supply is the enemy of gas pricing as well as availability, and the international market that controls oil prices — not the White House — always raises prices in times of conflicts.
In any event, Putin’s disdain for any international standards and for the effects of his expansionist aggression shows absolutely no regard for gas prices or supplies or imports and exports. There is only hope, not data, to support that a U.S. ban would have any effect on Putin’s continued bombing of civilians in Ukraine.
Looking at Assumptions
Still, this is all as much about symbolism and politics as it is about actual oil supplies.
A Vox News article laid out some of the myths underlying the assumptions being bandied about.
Production: Senate Republicans complain that Biden has shut leasing for oil and gas on federal lands. Yes, there was a pause on federal leases in the first months, but the Biden administration actually is outpacing the prior administration in issuing drilling permits on public lands and water in its first year, according to federal data analyzed by the Center for Biological Diversity. Last year saw the largest offshore lease sale ever in the Gulf of Mexico, before a federal court blocked the lease sale for not considering climate impacts. And a Louisiana federal judge has ruled against any lease moratorium.
New Drilling and Speed: The government has asked for more global production, but enabling new drilling is not flipping a switch, as some proponents suggest. Oil companies themselves have been moving away from new drilling projects and investing in solar, wind and bio-energy products. What is prompting the current interest is the price of crude and gas, which are subject to a whole lot else. More fracking and natural gas production may not help the U.S., which is experiencing a glut, and is unlikely to affect exports anytime soon because overseas plants would require expensive conversions to use it.
Keystone Pipeline: Republicans use the denial of permit for the pipeline from Canada to the Gulf as evidence of anti-oil policies. But the pipeline was about delivery of hard-to-clean crude oil pumped from sand which otherwise happens by truck and train. And the money goes to Canadians. It is unclear whether a working pipeline would have any real effect on the volume of Russian imported oil.
Climate concerns: Of course, we can drop climate concern as a policy to counter dependence on Russian oil, but the relative effects of pollution, wildfires, hurricanes and the rest as compared with those from the relatively small effect of Russian imports are vastly different. From a strategic point of view, doubling down on more oil and gas now is doubling down on the value of Russia’s main export, whether we buy it or someone else does. In any event, the climate view is global, not national.
Again, we may well decide that stopping Russian oil is good for us right now. But we shouldn’t fool ourselves about thinking it through.