Members of the G7 are meeting in Austria to discuss the Russian invasion of Ukraine, as well as climate change and public health. In one background press call, a senior Biden administration official announced that G7 leaders would “set a global price cap for Russian oil in shipments” to countries outside of the seven nations, which include Germany, Italy, the United Kingdom, France, Japan, Canada, and the United States.
“The goal here is to starve Russia — starve Putin of his main source of cash and force down the price of Russian oil to help blunt the impact of Putin’s war at the pump,” the official said. “The dual objectives of G7 leaders have been to take direct aim at Putin’s revenues, particularly through energy, but also to minimize the spillovers and the impact on the G7 economies and the rest of the world.”
Meanwhile, an Iranian official confirmed that Qatar would host indirect talks between the United States and Iran on a revival of the Obama administration’s defunct nuclear deal — a reality that could lead to the lifting of oil sanctions against the Islamic nation.
West Texas Intermediate and Brent crude oil prices rose slightly on Monday morning amid the news. The national average gas price in the United States is currently $4.90, according to AAA.
Financial sanctions imposed against Russia have “significantly disrupted Russia’s ability to receive payments for exports, pay for imports and engage in cross-border financial transactions,” according to the International Monetary Fund. However, the sanctions also threaten the status of the dollar as the global reserve currency.
Russian President Vladimir Putin has acknowledged the impact of the sanctions on his nation. “Our economy will need deep structural changes in these new realities, and I won’t hide this — they won’t be easy; they will lead to a temporary rise in inflation and unemployment,” Putin said in March, per The Wall Street Journal.
Earlier this month, President Biden invoked the Defense Production Act — a federal law allowing the commander-in-chief to prioritize manufacturing certain goods in times of national crisis — to accelerate green energy production. Even as prices at the pump continue to rise, Energy Secretary Jennifer Granholm repeated her argument that the “only way out” of “boom-and-bust cycles” in energy prices is “deploying clean energy.”
“The real truth is that as long as our nation remains overly reliant on oil and fossil fuels, we will feel these price shocks again,” Granholm said last week. “This is not going to be the last time. The next time there’s a war, the next time there’s a pandemic or another hurricane, these extreme weather events we are experiencing — they will impact the access that we have to fossil fuels.”
The Biden administration also proposed a three-month suspension on the federal gas tax — a move that would save the typical American a paltry $4.79 to $14.31 over the course of three months. Sen. Joe Manchin (D-WV) — a key moderate — said last week that he had not signed on to the idea since the policy does not guarantee that the amount would “penny-for-penny come off of that price.”