Russia’s invasion of Ukraine might seem to be a world away, but in reality, the violent and deadly attack launched Wednesday night will impact Oklahomans. Oil traded at $105 a barrel in London as of Thursday morning and it will eventually translate into higher prices at the pump—yes even in Oklahoma.
Oklahoma drivers will not be impervious to the far-reaching consequences the war is already having on energy markets. The increase in the energy market will also eventually affect other aspects of life in the United States because higher fuel prices means wider inflation. Higher costs for industries to ship commodities to markets and those higher costs will be passed along to guess who? The consumer.
Natural gas prices in Europe have increased and futures are reported to be up around 40% in some exchanges. Remember, Europe gets 40% of his gas imports from? Russia. Nearly a quarter of the gas shipments out of Russia to Europe passed through Ukraine and Russia is Europe’s largest oil supplier.
Here in the U.S., higher costs mean higher inflation, something that President Biden and Democrats have already been saddled with. Add the impact of the Russian invasion, and it means Biden will have to consider methods to ease its growth, such as possibly releasing more oil from the nation’s Strategic Petroleum Reserve.
Lest you think American businesses don’t have an investment in this crisis, consider the number of U.S. firms that have actual operations in Russia. Energy companies among them.
In 2016, an estimated 3,000 American companies had operations in Russia, according to the Association of Accredited Public Policy Advocates to the European Union. Who are they? Amway, Avon, Boeing, Black and Decker, Burger King, Cargill, Chevron, Cisco Systems, ConocoPhillips, Dell, ExxonMobil, General Motors, Halliburton, IBM, John Deere, MetLife, Nike, OTIS Lift, Starbucks, The Walt Disney Company, and Xerox—just to name a few.
How those American companies will be affected by U.S. economic sanctions is an unknown factor. But calls have grown for President Biden to get tougher on Putin, including one from Oklahoma U.S. Sen. Jim Inhofe.
“While I am continuing to monitor the situation as events unfold, I believe it is in our country’s best interest to respond strongly – by providing additional defensive aid to continue to help our Ukrainian friends defend themselves and by sending additional resources to our troops in Eastern Europe who are working alongside our NATO allies to deter this aggression from spreading further; and by imposing the most severe economic costs on Putin and his inner circle for this grave misstep. To be clear: Putin’s ambitions won’t stop with Ukraine – unless America and our allies stop Putin.”
Sen. James Lankford was equally adamant in calling for tough sanctions against Russia, saying they should be “crippling” on Putin, Russia and anyone who seeks to aid their actions.
“Europe is dependent on Russian oil and natural gas. Sanctions on Russian energy are meaningless unless the world responds by producing more energy to replace Russian oil and gas. During this moment of crisis, the United States should work to dramatically ramp up energy production to strengthen our allies and to cut off the flow of money into Putin’s war machine. Every dollar paid for Russian energy is a dollar they will use to murder their Ukrainian neighbors. America must lead the world by increasing our production of energy to decrease reliance on Russian exports. Russia’s economy is heavily dependent on energy sales, we should make sure that immediately dries up.”
Congressman Tom Cole’s response?
“America should do all we can to assist Ukraine in its hour of need. We should ask our friends and allies to do the same. Finally, we should do everything in our power to punish Putin and his criminal and repressive regime for this egregious act of aggression against an innocent neighbor. If he succeeds today, we will face further aggression from him and his likeminded associates tomorrow.”
Rep. Markwayne Mullin also responded to the invasion.
“I urge President Biden to reverse his anti-fossil fuel policies and open American oil and gas production so we can aide our allies in Europe and take back control of the energy market. My heart aches for the families who are experiencing this tragic violence and I ask that you please join me in praying for the Ukrainian people.”
Those statements came prior to President Biden’s special statement to the nation early Thursday afternoon, during which he vowed a “cold day for Russia” for its “naked aggression” and “choosing a war without a cause.”
Biden said the new and expanded sanctions will cost Russia dearly, adding, “we will make sure of that,” leaving Putin a “pariah on the international stage.”
Despite sounding tough about the severity of the latest round of sanctions, the President said they did not include removal of Russia from the SWIFT banking system, a step that some said would be one of the harshest financial penalties against the country.
SWIFT is the Society for Worldwide Interbank Financial Telecommunication, which is a cooperative of financial institutions formed in 1973 and headquartered in Belgium. It is overseen by the National Bank of Belgium with cooperation from other major central banks, including the U.S. Federal Reserve System, the Bank of England and the European Central Bank.
SWIFT is not a traditional bank and acts as a secure messaging system linking more than 11,000 financial institutions in over 200 countries and territories, alerting banks when transactions are going to occur.
Biden told reporters the newest sanctions “exceed SWIFT” and will be a “major hit” against Russia, reducing a large part of the country’s technological efforts.