US economy might be at risk if Russia shuts down oil exports
2 Min Read
Can the US economy handle Russia closing the tap on oil?
-
Moscow has warned several times that it won't supply energy to any country adopting a price cap. (Bloomberg)
According to The Washington Post sources, the US economy could be seriously harmed in case Russia completely shuts down oil exports.
Matthew J. Slaughter, an economist at Dartmouth College told The Post: "If Europe plunges into a depression after Russia shuts off energy exports and oil rises to $150 a barrel - there’s a possible impact to the U.S. there that’s really bad."
Supporting the previous claim, an economist at Moody's Analytics, Mark Zandi, told the paper that if Russia stops oil exports, gasoline prices would jump over $5 a gallon almost instantly, warning that the US "economy can’t digest $5 a gallon — that would be overwhelming,"
On the other hand, a senior administration official, who spoke on condition of anonymity, toned down the effects of a European recession on the US economy, telling the newspaper that the US Treasury Department and Council of Economic Advisors estimate that a modest and manageable impact on the US might result from a European recession since trade with EU accounts for less than 1% of US GDP.
Economist and co-founder of the Center for Economic and Policy Research, Dean Baker, also added to the optimistic view, saying, “We’re in such a perverse situation here it may actually be positive.”
Earlier, the European Commission prepared suggestions on measures aimed at tackling soaring energy prices to be discussed by the energy ministers of the bloc’s member states. The suggestions include the proposal to introduce a price cap on Russian natural gas.
Moscow has warned several times that it won't supply energy to any country, under reduced prices, if it adopts such a scheme. Still, the EU leadership is maintaining attempts to push forward with the gas price cap plan.
Russian Energy Minister Nikolay Shuliginov stated that gas price cap idea is a ‘cartel deal’ and that Russia refuses to supply any country with natural gas and oil below market price, slamming the "price cap" idea floated by EU officials as an attempt to force a "cartel deal" on Moscow.
