President Joe Biden announced a ban on all Russian oil imports on Tuesday, March 8 as part of U.S. sanctions over the invasion of Ukraine, warning that gas prices will go up further and Americans will pay at the pump.
“Putin’s war is already hurting American families at the gas pump,” Biden said at a press conference. “And with this action, it’s going to go up further … Americans have rallied to support the Ukrainian people and made it clear we will not be part of subsidizing Putin’s war.”
Record-high gas prices are contributing to inflation that’s hitting Black communities especially hard.
Gasoline buyers are paying 55 cents more than a week ago, and about 72 cents more than a month ago, CNBC reported. The national average for a gallon of regular gas rose to $4.173 on Tuesday, AAA reported. The previous high was $4.11 on July 17, 2008.
The price of Brent crude oil surged to almost $140 a barrel, its highest since 2008, upon news of Biden’s announcement, before trading off the highs.
In 2021, the U.S. imported about 8 percent of its total oil and refined product imports from Russia based on data from the Energy Information Administration.
Just before Biden’s announcement, the U.K. announced it will phase out Russian energy imports by the end of 2022. The European Union also unveiled plans to wean itself off Russian fossil fuels.
“We made this decision in close consultation with our allies and partners around the world, particularly in Europe,” Biden said. “We are working closely with Europe and our partners to develop long-term strategy to reduce their dependence on Russia.”
Russia is the world’s third-largest oil producer after the U.S. and Saudi Arabia, and the world’s No. 1 exporter of crude to global markets. It is also a major exporter of natural gas to the European Union, which gets 40 percent of its gas via Russian pipelines — several, through Ukraine.
While everyone will be paying more for products, inflation will ultimately cause Black Americans to pay for the war in Ukraine and sanctions via inflation.
1. Rising gas prices are expecially harmful for low-income households
A disproportionate number of low-income families are Black. Of the 13.4 million families with children in the low-income category in the U.S., most are racial or ethnic minorities and 22 percent are Black or African American, the Urban Institute reported.
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Research has shown that prices may rise faster for those who have lower incomes, a phenomenon called inflation inequality, wrote Adewale Maye, a policy analyst on race, ethnicity and the economy, in an article for the Center for Law and Social Policy (CLASP).
Rising gas prices are especially harmful to lower- and moderate-income households, according to a 2012 Brookings report.
2. Low-income families feel double impact when gas prices rise
Higher gas prices drain purchasing power from the economy and past oil price shocks have tipped the economy into recession, Isabel V. Sawhill wrote for Brookings.
For low-income households, that means they get hit twice when gas prices rise.
“Although higher gas prices eventually encourage consumers to cut back on driving or switch to more fuel-efficient vehicles, in the short-run they may have few options but to cut back on other expenditures in the family budget,” Sawhill wrote. “That means that these families get hit twice: once by the direct impact on their household budgets but a second time when higher prices retard the economic recovery.”
3. Gas prices could go as high as $185 a barrel
Russia has warned of $300-a-barrel oil, threatened catastrophic global consequences and said it will cut off gas to Europe if the West bans energy imports. Revenue from Russian oil and gas accounted for 43 percent of Russia’s federal budget from 2011 to 2020.
JP Morgan predicts oil could hit a record $185 a barrel by the end of 2022 if disruption to Russian exports lasts that long. Most analysts polled by Reuters said they expect a yearly average price below $100.
Rep. Val Demings from Florida’s 10th congressional district (the Orlando area) tweeted a suggestion to keep gas prices in check: “To bring down #gasprices, we should restrict the export of American-made gasoline which is currently being exported for sale in foreign markets,” Demings wrote. “Gasoline produced in America should be consumed in America, bringing down costs for working families right away.”
Photo: A private security guard fills up at a gas station in downtown Los Angeles, March 7, 2022. The price of regular gasoline broke $4 per gallon on average across the U.S. on Sunday for the first time since 2008. (AP Photo/Damian Dovarganes)