Western allies have targeted Russia’s lucrative energy sector in an attempt to punish Moscow for its invasion of Ukraine, but the move is a self-sacrificing one.
Energy bills and gasoline prices have been high for months, and governments have been cutting taxes and tapping into reserves in a bid to spare their citizens. Even so, energy consumers are feeling the pinch, particularly at the pump.
Gas prices reached a new all-time high at $5 per gallon in Massachusetts Tuesday, up more than 25 cents from the week prior. Massachusetts remains above the national average of $4.91 per gallon, according to AAA Northeast.
Harvard scholar Oleh Kotsyuba and Northeastern University professors Mai’a Cross and Pablo Calderon talked about how energy sanctions are related to inflation during NBC10 Boston's weekly series, "Russia-Ukraine Q&A."
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European leaders have agreed to slash Russian oil imports by about 90% over the next six months, a dramatic move that was considered unthinkable just months ago. It’s a landmark decision that will hit Russian coffers in the long term, but could also hurt consumers.
"This is something that hurts the EU's economy. The hope is that it just hurts Russia's more," Cross said.
President Joe Biden implemented a ban on Russian oil imports to the U.S. back in March, sending already skyrocketing oil and gasoline prices ever higher. The full embargo is most effective against Russia with its European allies, but the economic impact will be continue to be felt by both continents.
Unlike the U.S., which is a major oil and gas producer, Europe relies on imports for 90% of its gas and 97% of its oil products. Russia supplies 40% of Europe’s gas and a quarter of its oil. The U.S. does not import Russian natural gas.
Russia has the world’s largest natural gas reserves and is the biggest global exporter, according to the International Energy Agency. Since the 27-nation bloc is so heavily reliant, leaders aren't likely to sign off on a ban on Russian gas imports any time soon.
The oil ban is part of a new package of sanctions that will also include an exclusion of Russia’s biggest bank from SWIFT, the major global system for financial transfers. Despite the economic impact, local experts support the move and even called for it sooner.
"If the EU were more decisive in implementing the sanctions from very early on, that could have had a much stronger impact on ending the war, and in the long run, or in the short run, in fact, it is in EU's interest to do everything they can to end the war quickly, be it with supplies of weaponry or with severely restricting any kind of business being done with Russia," Kotsyuba said.
Moscow is waging a hugely expensive war in Ukraine. Oil and gas exports go a long way toward footing the bill. Last year they accounted for 45% of the federal budget, the International Energy Agency says.
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"I think this is is an important step and it's a necessary step," Calderon said of the ban. "But I think there's also the issue of gas, which is more important than the issue of oil necessarily. And gas is a real question for Europe, and if Europe is going to be able to survive in the long run without Russian gas, in particular during the winter."
The question now plaguing experts is how long the countries will be able to hold out through the economic turmoil.
"What happens then when these, to an extent self-imposed sanctions -- Europe is imposing itself, really -- start to bite? And really the cost of living crisis really becomes a lot worse in Europe?" Calderon posed. "And what happens, in particularly during the winter, when fuel prices skyrocket? What happens when Europe has no alternative but to buy Russian gas? And that's going to be the real question, the real moment of truth for European unity, for European public opinion in general."
Cross is particularly concerned about extremist movements in Europe using the rising cost of living as a reason to gain more voters and to stir up anti-EU sentiment.
"You get to the point where it's kind of like the EU is trying to do the right thing, but in the process, it risks actually undermining itself," Cross said. "It is worrying that the longer this drags on, the more they kind of have ways to say to say 'Look how you're suffering in Europe. Look at what the EU is doing. This isn't good for us.' I would rather see a quicker move to to end the war for this reason."
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The Associated Press contributed to this report.