President Joe Biden announced Tuesday that the United States and United Kingdom would ban all Russian energy imports. With fossil fuels accounting for up to 25% of Russia’s GDP and around 44% of their exports, this joint sanction will hit Russia hard where it hurts. The ruble has dropped over 40% since the beginning of the year and will continue to plummet. And with nearly 20% of federal government revenues coming from oil sales, the Kremlin will be in financial backwaters.
Unfortunately, the U.S. decision to ban Russian energy exports will also impact the U.S. economy. Over the last year, the U.S. has imported around 700,000 barrels of oil and refined products per day from Russia. These imports account for about 8% of total U.S. imports of these products. The U.S. needs to find a new supplier.
Over the last several months, Biden has tried working with OPEC to increase oil production. That has not worked very well. Now, rather than expanding the U.S.’s capability to produce oil, Biden has buckled under pressure from the green lobby and is trying to work with other countries to import their oil. Two of the countries his administration is talking to are Iran and Venezuela.
However, switching the U.S. supply from Russia to Iran and Venezuela is not a viable solution. Both countries have been under U.S. sanctions for more than a decade. And with good reason.
In the past, Iran has used oil profits to prop up terrorist organizations. They have also used profits to support their nuclear ambitions. Through multiple negotiations, Iran’s ruling class has shown no desire to change. If they are allowed to start selling oil again, they will likely use those profits to continue funding terrorists and building nukes.
Venezuela would also be a poor choice. Since 2010, Presidents Hugo Chavez and Nicholas Maduro have driven Venezuela into abject poverty, with nearly 77% of Venezuelans living on less than $1.90 a day. Any profits Venezuela makes would flow right into the ruling class’s coffers and allow them to continue funding terrorism, human trafficking, and other offenses.
Instead of opening relationships with Venezuela or Iran, which would have enormous negative consequences down the road, or continuing to try to work with OPEC to increase production, Biden should focus on increasing production at home. He needs to ignore the green lobby and go to work for the country.
Biden could start by greenlighting the Keystone XL Pipeline, which would allow the U.S. and Canada greater energy independence while allowing the U.S. cheaper access to Canadian oil. He could continue by directing the Interior Department to allow new oil and natural gas leases on public lands and water. According to its governor, North Dakota has the capacity to offset the loss of Russian oil, but the Biden administration is not allowing it. Biden could get rid of the regulatory roadblocks they are facing and allow them to start providing more oil.
Biden needs to immediately stop negotiations with the hostile regimes of Iran and Venezuela and start focusing on growth at home. Only through these strong actions, will the U.S. reach energy independence and the low energy prices American citizen’s demand.
Gabe Ure is currently a student at Brigham Young University studying finance and computer science