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US President Joe Biden is reportedly planning to halt gas and other energy exports, in a bid to lower fuel prices at home. This move could end up throwing plunging Europe into further chaos, as countries, including the UK, scramble to secure additional energy supplies for this winter. As Russia gradually ends its supply of gas to the European Union, countries that were heavily dependent on Moscow for gas have now been left scrambling to find additional suppliers before winter, or face blackouts. Even countries like the UK, which did not import much gas from Russia, face a crisis this winter as the competition for gas begins to grow.
This competition could get worse in Mr Biden, under pressure ahead of the US midterm elections in November, decides to limit US fuel exports in a bid to lower prices.
Giovanni Staunovo, a commodity analyst tweeted: “White House officials have asked the US Energy Department to analyze whether a ban on exports of gasoline, diesel and other refined petroleum products would lower fuel prices, even as top oil industry trade groups warned the Biden administration the move could backfire.”
Meanwhile, Karim Fawaz, an oil market analyst warned: “Trade bans are disruptive and counterproductive for well-documented reasons. But there are shades of bad.”
He added that while a gasoline export ban is bad, it “can be partly mitigated (e.g Jones Act waivers)”, and said that a “diesel export ban is awful and could have disastrous global consequences (especially Europe)”.
The idea was first proposed months ago but was largely dismissed by the oil industry. However now experts are increasingly concerned that Washington might go ahead with this plan.
As a result, the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers have written a joint letter to Energy Secretary Jennifer Granholm warning against the move.
The groups said in their letter that recent discussions raised “significant concerns” that the government may pursue a ban or limit on fuel exports, which would “alienate US allies in Europe.
They wrote: “Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate US allies during a time of war. For these reasons, we urge the Biden administration to take this option off the table.”
Over the past year, the US has ramped up its energy exports to Europe, particularly through liquified natural gas shipments, with figures showing that the US became the top LNG exporter in the world in the first half of 2022.
Through June of this year, the US exported about 57 billion cubic metres (bcm) of gas as LNG with 39 bcm, or 68 percent, going to Europe, Refinitiv data shows. That is compared with 34 bcm, or 35 percent, of LNG exports shipped to Europe for all of 2021.
Much of these LNG cargoes are shipped to the UK, after which the LNG is regasified- turned back into natural gas- at a number of terminals, before being pumped into Europe.
In response to the letter, a US Energy Department spokesperson said that energy companies were raking in record high profits after Russia’s invasion of Ukraine instead of ensuring that US consumers and allies have a reliable fuel supply at a fair price.
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They added that the administration is “going to continue to look at all tools available to protect Americans and uphold our commitments to our allies.”
This comes as EU ambassadors last night agreed on a new sanctions package against Russia, which measures including a price cap on oil imports, a number of diplomats told Politico.
The ambassadors will meet again today to finalise the deal, which could deal a significant blow to Russia’s cash cow, as Putin has been raking in billions in profits from soaring energy prices.
However, there are concerns that such a move would prompt retaliation from the Kremlin, as Putin previously threatened to freeze Europe if the EU imposes a cap on Russian gas, another move which has been gaining more support among EU diplomats.
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