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Today’s Entry: I was just watching Brett Baier’s show on Fox and he has a guy on that claimed to have inquired with the feds about oil imported from Russia in the past 2 weeks and he claimed it was 0.
Now, I haven’t heard that anywhere!!! Just thought you might want to check because you (Like everyone else) are saying we are still importing Russian oil. I believe we are, I’m just wondering why this guy said zero as a hard news report.
Bottom Line: Well, the guy you watched is literally wrong, but he’s also evidently being disingenuous as well. The United States in fact has been accepting delivery of Russian oil over the past two weeks and more is on the way to the United States as we speak. I’ll explain what happening here – and the basis for the comments of the “expert” you’re referencing but first here’s a reset of US policy – including the most recent government data on how much Russian oil we’re importing. Without explanation the way the energy markets work can be confusing.
As of today, the Biden Administration has not placed any sanctions on the importing of Russian energy. That means importing of Russian oil remains legal in the United States and shipments continue to arrive daily. In fact, the only thing President Biden has done since becoming president is dramatically raise the influence of Russia over the energy markets and specifically to make the US more reliant on Russian energy. Under the Trump administration, Russia wasn’t even a top ten energy trader with the US. Under the Biden administration petroleum imports into the United States have risen by greater than 400%. According to the most recent government reporting – Russia is currently the 3rd leading supplier of US energy – having recently passed Saudi Arabi for that distinction. The reason this has happened is due to Biden’s week one executive orders limiting domestic energy production and distribution.
With US production and distribution being limited by the Biden administration, but with demand for energy growing, the energy must come from somewhere. There aren’t many options around the world to replace that energy. Outside the US, the biggest bloc is OPEC. However, the cartel collectively regulates the amount of energy they’ll produce at any time. The OPEC countries made clear as recently as this week they’re thrilled with the highest price for oil in over a decade when they decided not to increase production levels – knowing that’d help lower prices. If the world’s top producer, the United States, is inhibited by its own government and if the OPEC nations have voted to not increase supply – where's that energy coming from? Russia has been and is the biggest beneficiary of the restrictive policy. That’s why Russia has risen from barely being a factor in the US energy conversation to the third leading outside provider of it to our country. That explains how we got here. As for what’s happening right now and to specifically address your question...
You’re likely familiar with the concept of market futures. As of the moment I’m writing this story a barrel of WTI Crude was selling for $109. That doesn’t mean that if you want a barrel of oil today you go to a dealer who sells it and fork over $109 to get a barrel of oil. You’re buying a contract to accept delivery of oil in the future by paying that price today. If you buy a barrel of oil today – that futures contract will provide delivery during the month of April. That’s how and why it’s easy to forecast future gas prices. As I recently demonstrated – oil impacts an average of 53% of the price you pay at the pump. This means that just anyone who has even a basic economic understanding can get you pretty close to what the price of gas will be a month from now. Anyway, this means Russian oil purchased weeks ago is being accepted daily in the United States. There has yet been a single energy trader, company or government who paid for the oil but has declined delivery of it due to principals over this conflict. And again – there's nothing by the Biden administration stopping anyone in the US from buying Russia energy today which will be delivered weeks from now. What has started to happen recently is a reluctance by US energy traders to contract with Russia for future deliveries.
Similar to the decisions you’ve seen by many retail companies and restaurants to ban the sale of Russian vodka (which no doubt is more negatively impacting American companies with Russian sounding names – because almost no Russian vodka is sold in the US anyway), you’ve had many US energy traders decide not to purchase energy futures contracts for future delivery from Russia. To the extent there’s truth to the statement made by the expert you cited – that's what’s behind it. So yes, every day during this war in Ukraine, Americans have been helping to fund Putin’s war. And here’s the thing. Even if US traders stop buying Russian oil specifically going forward – the oil market is a zero-sum game if no one increases production. China’s the world’s leading importer of oil as it is and is more than happy to buy Russian oil (who is already their leading supplier). Without the US increasing supply, Russia still benefits from the higher price of oil regards of who accepts delivery. That’s why the best answer to the current situation is a suspension of the Biden energy policy and a resumption of the Trump policy.