Earlier today, President Joe Biden put a ban on U.S. imports of Russian oil. In the long term, it will benefit our country, but it will cause oil prices to surge as the U.S. reworks where it gets its oil from.
You may recall that Biden went after domestic oil on his first day as president, shutting down the Keystone XL pipeline. If that wasn’t enough, government spending has been rampant during the pandemic, which has contributed to inflation. I spoke with U.S Senator Bill Cassidy on both issues, as Americans want to know when inflation and the pain at the pump will end.
What did the Congressional Budget Office tell you about how inflation will impact the federal budget?
They found out if inflation is higher than their forecast, which it is, that interest rates are going to go up. When interest rates go up, taxpayers end up paying more on their debt, which drives up the deficit even more. The CBO said that the projected deficit would be bigger by $2.3 trillion over the next 10 years, under a higher interest rate scenario. President Biden gave his State of the Union saying that everything is rosey and saying he cut the deficit… he actually said the worst is yet to come.
Have you heard from economists as it relates to inflation rate projections through the course of this month?
Right now it's at a 40 year high, but that’s actually deceiving. 40 years ago the federal government included the cost of fuel, gasoline and groceries in the inflation rate, now they don’t because those prices are too volatile.You can argue that our inflation rate, if measured as it was measured 40 years ago, is even higher than it is now. The person who bought steak and now buys hamburgers can tell you that the inflation rate is higher. Excluding groceries from the inflation rate calculation seems to hide the true impact.
Senator, what are your thoughts on the U.S. banning the use of Russian oil?
We clearly have to balance geopolitics with economic impacts on individuals and countries, as well as things like climate, and the energy supply. The people who refine oil tell me that we will need to rebalance international markets… Russia will sell their oil to China, China won't buy their oil from somebody else, and over the next couple months, there'll be a rebalancing of where oil goes around the world. The bigger thing is, how do we go forward and how do the Europeans go forward? European countries are particularly vulnerable to this. Here in the U.S., we have to balance the impact upon the family's budget, the impact upon the national economy, along with energy supply and environmental concerns.
Why would it not be better for the U.S. to get oil from Canada and Mexico, as our economies have become more blended over the years?
It absolutely would be. If you buy something from Mexico or Canada, they’ll spend about 60 cents of that dollar back in the U.S. economy. If you buy something from China, only about 10% of that is spent back in the U.S. economy. It helps us to buy from our neighbors.
Could sanctioning Russia and putting a ban on their exports come up again? If Finland decides that they want to join NATO, aren't we right back where we started all over again?
I think the Russians have shown they have a big army, but it’s not very organized or strong.
There's gonna be countries that are nervous that Russia invaded Ukraine. They probably feel that if they’re a part of NATO, that they are protected. NATO should only allow countries like Finland to join if the Europeans are willing to defend Europe…and the United States has to recognize that Louisiana is going to be incredibly important to the Europeans ability to survive. Louisiana has to be able to produce liquified natural gas that Euorpeans countries can use instead of Russia’s gas.
