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Prices for gasoline surge to about $4.17 per gallon, a national record

RACHEL MARTIN, HOST:

No more Russian oil to the United States. That is what President Biden is expected to announce later this morning. It's another way for the U.S. to punish Russia for its unjustified war in Ukraine. European allies are holding off on this for now. Cutting off Russian energy would have a huge economic hit on those countries. So while the West response to this war has been united, on this measure, the U.S. is going it alone. And, of course, this comes as gasoline prices in the U.S. have hit a new record high - $4.17 a gallon. That is up 55 cents in just the last week.

NPR's economics correspondent Scott Horsley joins us this morning. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Rachel.

MARTIN: President Biden had initially avoided sanctions on Russian energy exports, even as most other commerce with Russia was choked off. So what changed his mind?

HORSLEY: Oil is by far Russia's most lucrative export. It's the lifeblood of Russia's economy. And right now, Russia's oil sales are helping to bankroll bloodshed in Ukraine. The president of Ukraine's been pushing for a boycott. Both Democrats and Republicans in Congress have been lobbying for one. Economist Simon Johnson at MIT wrote an op-ed in the Los Angeles Times this week, along with an adviser to Ukraine's president, arguing that whatever price Americans have to pay in higher gasoline cost pales in comparison to what Ukraine's going through right now.

SIMON JOHNSON: If we have an inflation shock and we deal with it, that makes our lives a bit harder. But we will get through that, and we will be fine. The Ukrainians are not fine. They are being slaughtered.

HORSLEY: Now, the United States buys a relatively small amount of oil from Russia, so this move the president's announcing this morning is likely to have limited effect on world markets and Moscow's finances unless other countries follow suit.

MARTIN: So let's talk about that. I mean, how likely are the Europeans to follow, to swear off Russian oil?

HORSLEY: You know, up until now, the U.S. and its allies have put up a remarkably united front in imposing economic cost on Russia. They've been more coordinated in their sanctions than a lot of analysts had expected when the war began. But David Goldwyn, who's a former energy envoy with the State Department, says when it comes to energy - that is oil and natural gas - the Europeans are just much more dependent on Russia than the U.S. is.

DAVID GOLDWYN: The U.S. can substitute, you know, Colombian or Saudi or Mexican or Canadian crude. And we can do without it. It's very different for Europe.

HORSLEY: And, you know, U.S. action on its own is largely symbolic. I mean, Russian oil that Americans don't buy will simply go elsewhere. The possibility of a more coordinated boycott, however, has rattled both energy and financial markets. The Dow Jones Industrial Average tumbled nearly 800 points yesterday.

MARTIN: So the U.S. doesn't import a ton of energy from Russia. But still, it's going to, I imagine, have some impact. Are we going to see more higher prices at the pump?

HORSLEY: Well, it depends on what other countries do and what happens with crude oil prices. Crude oil prices shot up in anticipation of some sort of coordinated boycott. And as a result, gas prices have surged to a record high. Now, I should say, if you adjust for inflation, gas is still cheaper now than it was back in 2008, the last time prices topped four bucks. But over the last year, rising gasoline prices have actually been a big driver of inflation. And ever since Russia invaded Ukraine, gas prices have been on steroids.

What's more, if you think your fuel bill's high, think about the truck drivers. Diesel prices have climbed even higher to 4.75 a gallon on average across the country. That's up 74 cents in just the last week. And truck drivers like Monte Wiederhold have to buy hundreds of gallons of fuel every time they fill up.

MONTE WIEDERHOLD: We have fuel cards that they can use at the truck stops. We'll probably have to go back in and raise the limits on them because some of them only have, like, a $750 limit.

HORSLEY: Now, Wiederhold says his customers do pay a surcharge for fuel. But lately, diesel costs have been rising so fast it's been hard for that surcharge to keep up. Ultimately, higher diesel costs will be reflected in the price of everything that travels by truck, which, of course, is most of the stuff that consumers buy.

MARTIN: NPR chief economics correspondent Scott Horsley. Scott, thanks. We appreciate it.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

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