Biden leans on consumers to pressure Russian economy

The Biden Administration is leaning on American consumers to help pay the price for its economic pressure campaign against Russian President Vladimir Putin.

Tuesday’s White House announcement to ban US imports of Russian fossil fuels marked the latest move against Russia. It also reveals that the war in Ukraine will affect Americans at gas stations and in supermarket checkout lines.

Gasoline prices in the United States hit a record high on Tuesday, according to AAA. The average price of regular unleaded gasoline hit $4.17, up $0.55 in just one week and buoyed by global oil prices hitting the highest since 2008.

The US campaign carries some political danger for President Joe Biden as Democrats head into the November midterm elections with control of Congress on the line and Republicans already looking to blame them for inflation, especially rising housing prices. Energy.

Biden acknowledged that the ban on Russian oil is a decision that “has a cost here at home”. She said she was theputin’s war” the one that was affecting American consumers and promised to mitigate the consequences.

US officials are in talks with their counterparts in Venezuela as they consider waiving some sanctions, which would allow the South American country to sell more oil on world markets. Such a step would mark a relaxation in the US stance towards a regime that it has previously branded as corrupt and undemocratic.

At home, the Biden Administration stopped short of directly asking America’s energy producers to ramp up production to ease the pressure Americans face at gas stations.

“It takes time to meet demand”, said Wally Adeyemo, deputy secretary of the Treasury of the United States, indicating that consumers should prepare for higher prices for now. “These high costs are not something that only affects Americans.”he said, adding that much of the world economy is mired in inflation.

Adeyemo noted that US consumers have so far been resilient amid rising inflation.

CPI inflation for March under oil scenarios

But it is not certain how long that will last.

Russia’s invasion of Ukraine has caused a feverish rise in the prices of nearly all commodities, from oil to grains to metals, and that will inflict even more financial strain on consumers already grappling with runaway inflation.

The United States obtains essential energy and agricultural products from Russia and Ukraine. The two nations’ combined exports of wheat, barley and corn make up 21% of the world total, and their supply of sunflower oils accounts for 60%. Wheat prices peaked on Tuesday. An unprecedented rise in nickel caused the London Metal Exchange to suspend trading.

Oil prices hovered around $128 a barrel on investors’ assessments of the risks of Russia’s total economic isolation. Bloomberg Economics estimates that, at US$120 a barrel of crude, inflation could accelerate to an annual 9% by April and end the year close to 7%.

A March 7 Quinnipiac University poll found that 71% of Americans would support a ban on Russian crude oil, even if it means higher US gasoline prices. But the poll did not ask respondents about specific prices they they would be willing to tolerate.

Russia and Ukraine: crucial granaries for the world

Rising prices will be a backdrop to November’s midterm elections, likely hurting the Democratic Party’s chances of keeping control of Congress. Inflation has influenced Americans’ views on where the country is headed, and consumer confidence hit its lowest level since 2011.

However, high costs have masked the strong recovery in the labor market. Unemployment has fallen to 3.8%, well below the 6.4% average of the last economic expansion. Households also benefited from a historic expansion in federal support to families, with stimulus checks and other assistance.

Much of that comes from the US bailout plan that Biden signed into law a year ago.