Academic Essays

Ban on Russian Oil: A Win or Loss for the Climate?

Russia spent weeks developing a tremendous military presence along its border with Ukraine, followed by a full-scale invasion of the country on February 24th, 2022 (Reals & Sundby). In support of Ukraine, the United States implemented a bipartisan ban on Russian oil imports, shrinking the oil supply and causing gas prices to increase for American consumers. Energy goods are price inelastic both in the short and long-term, which means that consumers' buying habits stay the same when the price fluctuates (Labandeira et al. 549-568). The rise in gas prices is challenging for many people to accommodate, creating an issue that many senators are trying to solve. However, there is no agreement on how to respond. Some senators, like Arkansas Republican Lisa Murkowski, have suggested the U.S. increase domestic oil production. Other senators, such as Massachusetts Democrat Ed Markey, advocate for the U.S. to invest in clean energy technologies (Tigue).

The importance of this debate can not be understated. "We are perilously close to tipping points that lead to cascading and irreversible climate impacts," says U.N. Secretary-General António Guterres (Kriegler). We are already experiencing symptoms of the climate crisis today. A shift towards clean energy technologies like Senator Markey proposes could be monumental in reducing carbon emissions. But is that feasible? In this essay, I will utilize class concepts like supply and demand analysis, winners and losers from policy, and elasticity of demand to determine if the ban on Russian oil will be a win or loss for the green energy industry.

I analyzed what Yale economists expect to result from the energy debate to understand the issue more clearly. The resounding consensus is that there will be an increase in domestic oil production in the short term but an accelerated transition to renewable energies in the long run (Maney & Hughes). The solutions are not mutually exclusive. Economics professor Matthew Kotchen summarizes his peers' expectations: "the more likely result in the short-term is just going to be an increase in production of oil products from within the U.S., [but] in the long run, there may be an increasing national security rationale for more renewable sources of energy."

Their anticipations are correct. The American Petroleum Institute issued a statement calling for expanded domestic drilling— just minutes after President Biden announced the ban (Noor). U.S.oil production has increased under President Biden; record highs for 2022 and 2023 were expected even before the oil ban (French & Ameen). In the short-term, oil production will increase. There may be more renewable energy to rely on in the long run. Last April, for example, the Biden administration announced its intention to cut U.S. greenhouse gas emissions by 50% by 2030 through clean energy avenues (Hoffman).

The changes in supply from S1 to S2 cause an increase in the average domestic equilibrium price from $2.66 to $4.17 per gallon (Stewart). The quantity of oil purchased does decrease some, but not much, because of the inelastic, vertical nature of the demand curve.

In the short-term, domestic oil production will increase. This policy will have harmful effects on the environment because the quantity of oil at the new equilibrium increases. Additionally, the money spent subsidizing oil can not go towards causes that will help the environment, such as reforestation, renewable technology research, and adapting urban spaces. But, oil consumers and producers will benefit because consumers can pay less, and producers will make more.

Creating clean substitutes, in comparison, is a long-term alternative because it will take more time. This policy positively affects the environment because the quantity of oil at the new equilibrium decreases, effectively lowering America's carbon footprint. The money spent on green energy technologies has the potential to create jobs, increase communities' quality of life, prevent the catastrophic loss of biodiversity, and, among a plethora of other benefits, reduce the likelihood that planet Earth will become inhabitable. If Earth is livable, that will have positive economic effects. Furthermore, the equilibrium price of oil after a substitute goes down.

In conclusion, the two solutions— increasing domestic oil supply and creating clean substitutes— can be used complementarity. The climate will initially lose due to increased oil consumption made possible by subsidies but then win after a transition towards green energy.

Works Cited

French, Matthew, and Naser Ameen. "U.S. crude oil production forecast to rise in 2022 and 2023 to record-high levels." EIA, 16 February 2022, https://www.eia.gov/todayinenergy/detail.php?id=51318. Accessed 10 April 2022.

Greve, Joan E., and Edward Helmore. "Joe Biden bans Russian oil imports in 'powerful blow to Putin's war machine.'" The Guardian, 8 March 2022, https://www.theguardian.com/us-news/2022/mar/08/russian-oil-imports-ban-us-joe-biden. Accessed 9 April 2022.

Hoffman, Jenna. "How the Russian Oil Ban Will Impact Clean Energy Debates." AgWeb -, 8 March 2022, https://www.agweb.com/news/policy/politics/how-russian-oil-ban-will-impact-clean-energy-debates. Accessed 9 April 2022.

Kriegler, Elmar. "'It's now or never': UN climate report shows globe is on 'track toward an unlivable world.'" USA Today, 4 April 2022, https://www.usatoday.com/story/news/nation/2022/04/04/un-climate-report-unlivable-world/7269194001/. Accessed 9 April 2022.

Labandeira, Xavier, et al. "A meta-analysis on the price elasticity of energy demand." ScienceDirect, vol. 102, no. 0301-4215, 2017, pp. 549-568, https://www.sciencedirect.com/science/article/abs/pii/S0301421517300022#! Accessed 9 April 2022.

Maney, Isabel, and Charlotte Hughes. "Russian oil ban – a possibility for greener energy?" Yale Daily News, 11 March 2022, https://yaledailynews.com/blog/2022/03/11/russian-oil-ban-a-possibility-for-greener-energy/. Accessed 9 April 2022.

Noor, Dharna. "Could clean energy replace Russian oil?" Boston Globe, 14 March 2022, https://www.bostonglobe.com/2022/03/14/science/could-clean-energy-replace-russian-oil/. Accessed 10 April 2022.

Reals, Tucker, and Alex Sundby. "Russia's war in Ukraine: How it came to this." CBS News, 23 March 2022, https://www.cbsnews.com/news/ukraine-news-russia-war-how-we-got-here/. Accessed 9 April 2022.

Stewart, Emily. "Yes, the Russian oil ban means gas will get more expensive." Vox, 8 March 2022, https://www.vox.com/the-goods/22949683/russia-ukraine-gas-prices-oil-inflation-stock-market. Accessed 10 April 2022.

Tigue, Kristoffer. "What Does the Russian Oil Ban Mean for the Clean Energy Transition?" Inside Climate News, 8 March 2022, https://insideclimatenews.org/todaysclimate/what-does-the-russian-oil-ban-mean-for-the-clean-energy-transition/. Accessed 9 April 2022.