Still no endgame for war, petrol blues
Western leaders grapple with effects of Russia’s invasion of Ukraine. By Jim Tankersley
Some analysts say that oil prices could skyrocket toward $200 a barrel.
US President Joe Biden issued a grim warning to Americans after Russian troops invaded Ukraine in February: Standing up to President Vladimir Putin could hurt the US economy. “I will not pretend this will be painless,” he said in remarks delivered in the East Room of the White House. But few in Mr Biden’s administration imagined just how much domestic political and economic pain could come from the grinding war in Ukraine’s east: growing anger about US$5-a-gallon (177 baht) gasoline, deepening frustration over rising food costs and rents and rising opposition to spending billions of dollars on a foreign conflict with no end in sight.
In meetings of the Group of 7 nations and Nato this week in Europe, Mr Biden and his allies hammered home the idea that they must stand united against Russia while drawing new and firmer lines against what they see as predatory economic practices by China.
But the gatherings also underscored the war’s deep strains on Western leaders and consumers from energy costs that have soared as a result of severe sanctions imposed on Russia and that could climb higher still.
For all the steps that Mr Biden and his allies took to counter Russian aggression — including a fast path to Nato admission for Finland and Sweden and a plan to cap the price of Russian oil exports — the leaders failed to describe the endgame in the long war of attrition.
Mr Biden is already feeling political heat from his swift response to the Ukraine invasion. His push to ban Russian oil imports shortly after the invasion was followed by global price spikes, which have sapped consumer confidence and threatened the Democrats’ hold on Congress in the coming midterm elections. Republicans have tried to blame the president’s policies on energy and climate, but the invasion and the West’s response to it are the reasons for the surge.
If the war drags on and Mr Biden fails in his plan to keep Russian oil flowing at a severe discount, some analysts say that oil prices could skyrocket toward $200 a barrel, which could mean $7 a gallon gas or more — prices that, if they held, would severely damage Mr Biden’s reelection hopes.
An extended conflict would also require the United States and its allies to find additional money for military and other aid to Ukraine, on top of the $40 billion that Congress has already approved this year. For now, it is just a small group of opponents questioning the spending, but that discontent could spread, providing a line of attack for former president Donald Trump, who is signalling plans for a rematch with Mr Biden in 2024.
Those currents make the next several months crucial for Mr Biden and his emboldened international coalition — a fact that administration officials have begun to acknowledge.
Mr Biden’s national security adviser, Jake Sullivan, told reporters on the sidelines of the G7 meetings in the German Alps that allies would attempt to help Ukraine’s outgunned forces gain as much leverage in the war as possible before winter, because “a grinding conflict is not in the interest of the Ukrainian people, for obvious reasons”.
Mr Sullivan and Treasury Secretary Janet Yellen said officials would move quickly to negotiate and implement the myriad unresolved details of the proposed cap on the price of Russian oil exports, promising there would be relief for drivers at the gasoline pump if it is put in place.
But many economists and energy experts doubt that a cap, which has never been tried on a global scale like this, could come together effectively any time soon. Privately, some administration officials concede that it could take until late fall or longer.
Data released by the Commerce Department on Thursday showed that prices affected by the war, such as those for food and energy, continued to surge in May, while the growth rate of other prices levelled off. Mr Biden blamed Mr Putin. “The reason why gasoline prices are up is because of Russia,” he said at the news conference.
At least some temporary relief could be on the way for American motorists. The average national price has dipped slightly in recent weeks, and future contracts to buy gasoline have declined much more significantly, suggesting gas stations may be reducing prices in July.
But many analysts say they think prices could surge again later this year as Europe’s ban on Russian oil imports takes effect, unless Mr Biden’s price cap plan succeeds.