“I’m for it. Ban it,” House Speaker Nancy Pelosi said this week.
The two-party bill, introduced this week by Democrat Sen. Joe Manchin of West Virginia and Republican Lisa Markowski of Alaska, will do just that.
Keep in mind that this is very different from the broader step of imposing sanctions on Russian oil, a move that would prevent almost all nations from using Russian oil.
A strict ban on Russian oil imports from the United States is unlikely to have a dramatic impact on US gas pump prices, which rose to their highest level in nearly a decade this week.
This is for a simple reason: unlike Europe and Asia, the United States does not actually use much Russian oil.
Russia delivered only 90,000 barrels of crude oil a day to the United States in December, according to the latest U.S. government statistics.
This pales in comparison to the oil that the United States receives per day from Iraq (223,000), Saudi Arabia (472,000) and Mexico (492,000), not to mention the 4.1 million imported from Canada every day.
“Not critical to the mission”
In other words, Russia accounted for less than 2% of all US oil imports in December, according to the US Energy Information Administration.
“This is not critical to the mission. Canada, Mexico, Saudi Arabia – these are the big boys,” said Tom Klose, global head of energy analysis at the Oil Price Information Service. “Russia is a small player.”
Some refineries in the United States use unfinished Russian oil, mixing it with other barrels to produce gasoline, jet fuel, diesel and other products. But even in this broader measure, Russia is far from a huge player in the United States.
Russia exported only 405,000 barrels a day of crude oil and petroleum products to the United States in December. This represents less than 5% of total US crude oil and oil imports.
Symbolic ban
American refineries can live without this Russian oil if they have to. (And they may have to, soon enough).
“This refinery purchase is mostly opportunistic in nature, not necessary,” said Ryan Fitzmaurice, an energy strategist at Rabobank.
This does not mean that there will be no impact. A ban on Russian oil could create modest headaches for several refineries and make the energy system as a whole less efficient as oil flows are diverted to compensate.
“In short, the US ban on Russian oil imports would be largely symbolic,” Fitzmaurice said.
Full sanctions are another story
Equalizing sanctions directly on Russian oil would be a much bigger deal. This would prevent not only the United States but also countries around the world from using Russian oil without facing sanctions.
The financial consequences can be huge. World supply was no longer able to cope with demand even before Russia’s invasion of Ukraine. Russia was the second largest oil producer on the planet last year, pumping more oil from Canada and Iraq combined.
US allies in Europe rely heavily on Russian oil to keep their economies stable.
“Russian oil is not crucial for the United States. It is crucial for Europe,” Klose said. “I don’t know what Europe will do without Russian oil. If you take it, Europe is really behind the eighth.”
“No way to compensate”
The West has done everything in its power to avoid directly sanctioning Russian oil, however uncertainty over sanctions has already led to a de facto ban on Russian oil. Many refineries, traders, freight forwarders and banks are reluctant to come close to these things. According to JPMorgan, more than 4 million barrels a day of Russian oil have been virtually abandoned, causing oil and gasoline prices to skyrocket.
The problem is that Russia is such a big player on the world stage that it would be difficult to replace all this oil in the short term.
A potential nuclear deal with Iran, which seems increasingly likely, would help. But even that would add only about 1 million barrels of oil a day to a market that needs much more than that.
OPEC +, a group that includes Russia itself, is not coming to the rescue. The Saudi-led group has been refusing to open its taps for months.
US oil companies produce more oil, but only at a modest pace, as they focus on returning cash to shareholders and cope with their own financial pressures.
“There is no way to compensate for the loss of all Russian exports without noticing the gas pump,” said Jason Bordoff, founder of Columbia University’s Center for Global Energy Policy. “This may be the price we are willing to pay to tell Russia that its actions are unacceptable.