MOLINE, Ill. — President Joe Biden announced on Tuesday a U.S. ban on imported Russian oil and other energy products, calling it a "powerful blow to Putin's war machine."
The decision is expected to cause higher gasoline and other energy prices in the U.S. and worldwide.
It comes as the national average gas price hit an all-time high Tuesday at $4.17 per gallon, according to AAA. That's six cents more than the record previously set in 2008.
On Tuesday in the Iowa Quad Cities, the average price for regular unleaded is $3.89 per gallon, up 11 cents from Monday. In the Illinois Quad Cities it's $4.29, up eight cents.
"It's not that the actual impact of the ban itself has already been felt in those prices," said Dr. William Polley, an associate professor of economics at Western Illinois University. "It's the knowledge that things are going to go up in price at the wholesale level shortly."
However, he said the ban will have a minimal impact on the Russian economy, calling it a "symbolic" ban.
Last year, around 8% of U.S. imports of crude oil and petroleum products came from Russia, specifically 3% of U.S. oil came from Russia. The U.S. imported a total of 245 million barrels in 2021, roughly 672,000 barrels of oil and petroleum products a day.
Russia sent 1% of its oil exports to the U.S. in 2020, according to the White House.
"From now on for the foreseeable future, we are going to have to get that oil from somewhere else," Polley said. "And we can make that up very easily. Even just ramping up domestic production a tiny bit would overcome that."
The high prices and the market instability comes from the uncertainty, he added.
One of those uncertainties being whether or not Europe will follow suit and ban Russian oil.
Europe gets about 40% of its natural gas from Russia for home heating, electricity and industry uses. About a quarter of its oil is from Russia.
"Because the U.K. and other European countries do get so much more of their supply from Russia, they are going to have to reduce those supplies over a period of time, they can't just shut it off," Polley said.
If Europe does implement a ban, that's where the world economy is going to see the greatest impact, and when U.S. gas prices are going to increase even more he said.
"If Europe also joins in this ban, then they are going to be seeking out other (oil) sources like the Middle East, Mexico, Venezuela and Canada and so forth," Polley said. "And we are going to be competing with them to get those remaining supplies."
He believes the U.S. ban could be the push that Europe needs to implement its own ban, saying he thinks "Europe would be hesitant to do it without the United States' support."
"If Europe goes forth with with their ban, then it's going to have a much larger impact on Russia," Polley said. "It's a small and symbolic step for (the U.S.) and will impact us slightly, but it will affect Europe a lot more."
The European Commission did release on Tuesday its proposed plan to make the European Union independent from Russian fossil fuels before 2030.
The oil ban will also have an impact beyond the gas pump.
About 60% of global oil consumption comes in the form of fuel, and what's left goes to some household products which could now also see price increases. That includes anything made out of, or packaged in, plastic such as smartphones and TV's. Car parts, including tires and foam seat cushions, will also be impacted.
Fossil fuels are used in industrial fertilizer which could raise the price of grain, meat, egg and dairy products at the grocery store.
Even anything in your medicine cabinet, including burn ointment, cold and allergy pills, gummy vitamins and band-aids, could cost more.
Polley also said to keep an eye on the Federal Reserve in the coming week.
"This makes it somewhat worse for U.S. inflation, it does make the job of the Federal Reserve this month even a little bit harder deciding how much to increase the benchmark federal funds interest rate," he said. "If we were to add another 50 or more cents to the gallon of gasoline, then people are going to be more concerned about both the inflation and the potential for economic slowdown. Makes it a very tough call for the Federal Reserve."