Russian Invasion of Ukraine (2022)

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    Trade Between Russia and Britain Falls to Lowest Level on Record

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    For the first time since records began, Britain had a month in which it imported no fuel from Russia, as trade between the two countries plummeted following Russia’s invasion of Ukraine, according to British government statistics released on Wednesday.In addition to a sharp decline in imports of Russian fuel in June, imports of other Russian goods also fell that month to the lowest level since Britain’s Office for National Statistics began recording the data in 1997. Imports decreased to 33 million pounds ($39 million), or 97 percent less than the average monthly imports in the year to February, the month when Russia invaded Ukraine.The figures show the extent to which the British government’s economic sanctions against Russia, which came into force in March, are having an effect. Self-sanctioning, where companies voluntarily seek alternatives to Russian goods, was also likely a factor in the steep decline in trade, according to the Office for National Statistics.Exports of most commodities to Russia from Britain also dropped significantly, led by a decline in exports of machinery and transport equipment. The exception was medicine and pharmaceutical products, which increased by 62 percent from the prewar average. These products are exempt from sanctions.Under sanctions, British companies have until the end of the year to end imports of Russian oil and coal and have been encouraged to find alternative sources until then. To make up for the decreased volumes of refined oil from Russia, British companies in recent months have increased imports from Saudi Arabia, the Netherlands, Belgium and Kuwait.Before Russia’s invasion of Ukraine, Britain imported nearly a quarter of its refined oil from Russia, 6 percent of its crude oil imports and 5 percent of its gas imports. (Britain gets about half of its total crude oil imports from Norway.)The European Union has also reduced its purchases of Russian gas ahead of a ban on the vast majority of the bloc’s imports of Russian oil, which will come into force at the end of the year. The European Union also agreed to curb natural gas consumption from Russia. In the final week of June, total E.U. gas imports from Russia were down 65 percent from a year earlier, according to a report by the European Central Bank.Russia is feeling the effect of sanctions. Its economy contracted sharply in the second quarter, declining 4 percent from a year earlier. Sanctions on Russia have led many American and European companies to exit the country and have cut off Russia from about half of its $600 billion reserves of foreign currency and gold.One boost for Russia’s economy has been higher oil prices, which have helped it make up for revenue that would have come from buyers in Europe. India, China and Turkey have stepped up their purchases of Russian crude, providing temporary relief, but once the European Union oil ban comes into full effect, Russia will need to find buyers for roughly 2.3 million barrels of crude and oil products a day, about 20 percent of its average output in 2022, according to the International Energy Agency. More

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    Falling Oil Prices Defy Predictions. But What About the Next Chapter?

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    Oil is under $90 a barrel, and consumers are benefiting. Geopolitics, the economy and unforeseen events will determine whether the relief will last.When Russia invaded Ukraine last spring, energy experts were predicting that oil prices could reach $200 a barrel, a price that would send the costs of shipping and transportation into the stratosphere and bring the global economy to its knees.Now oil prices are lower than they were when the war began, having dropped more than 30 percent in barely two months. On Monday, news of a slowing Chinese economy and a cut in Chinese interest rates sent prices down further, to less than $90 a barrel for the American benchmark.Gasoline prices have fallen every day over the last nine weeks, to an average of less than $4 nationwide, and prices of jet fuel and diesel are easing as well. That should translate eventually to lower prices for things as diverse as food and airline tickets.But it would be premature to celebrate. Energy prices can spike as easily as they can plummet, unexpectedly and suddenly.China, where Covid-19 lockdowns remain widespread, will eventually reopen its cities to more commerce and traffic, increasing demand. Withdrawals of oil from the U.S. Strategic Petroleum Reserve will end in November, and it will need to be refilled. And a single unexpected event — say, a hurricane flooding the Houston Ship Channel and taking several Gulf of Mexico refineries out of commission for weeks or even months — could send fuel prices soaring.That sort of catastrophe could send tidal waves though the American and even global economy since energy prices are fundamental to the prices of everything that is shipped and produced, whether it be grain or building supplies.Down from recent peaks, oil prices remain highPrice of West Texas Intermediate crude oil

    Source: FactSetBy The New York Times“Oil prices always have the capacity to surprise,” said Daniel Yergin, the energy historian and author of “The New Map: Energy, Climate and the Clash of Nations.” Prices could ease further if Iran agrees to a new draft nuclear agreement after it backed off from its demand that the Islamic Revolutionary Guards be removed from the U.S. terrorism list, opening a potential spigot of at least one million more barrels a day of Iranian petroleum exports.In addition, the prospect of a continuing increase in interest rates has many investors and economists predicting a recession — and a reduction in demand — even though unemployment is low and profits remain resilient.Understand the Decline in U.S. Gas PricesCard 1 of 5Understand the Decline in U.S. Gas PricesGas prices are falling. More

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    Estonia Never Needed to Import Gas by Ship. Until It Did.

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    In Paldiski, Estonia, abandoned Soviet-era bunkers, splattered with graffiti and overgrown with weeds, are a reminder of the centuries-long domination that Russia once exerted over the Baltic region.Now this port city in the northwestern corner of the country is hastily being turned into a bulwark against Russian efforts to politically pressure Europe. Ever since Moscow threatened to withhold natural gas as retribution for countries opposed to its invasion of Ukraine, workers in Paldiski have been constructing an offshore terminal for non-Russian gas at a round-the-clock pace.The project is one piece of Europe’s strategy to quickly wean itself off the Russian energy that is heating homes and powering factories across the continent.The Estonian terminal will serve as a floating dock for a gargantuan processing tanker that will receive deliveries of liquefied natural gas and convert it back into a vapor that can be piped through the existing network that serves the Baltics and Finland. With a scheduled finish date in November, Paldiski is on route to be the first new L.N.G. terminal completed in Europe since the war started.Shipping natural gas in a liquefied form has become Europe’s eureka solution to what the European Commission has labeled “energy blackmail” by President Vladimir V. Putin of Russia. Since the fighting began in late February, 18 new facilities or expansions of existing ones have been proposed in 11 European countries, including Germany, the Netherlands, Italy and Greece, according to Rystad Energy.The L.N.G. project in Paldiski is one of 18 proposed or under expansion in Europe since Russia attacked Ukraine.Marta Giaccone for The New York TimesGiant beams were installed with a floating crane.Marta Giaccone for The New York TimesEuropean leaders have been traveling to the Middle East and Africa — including to some countries previously held at arm’s length because of human rights abuses — to compete for the world’s limited L.N.G. supply or plead for the rapid development of additional sources. Until the war, China, South Korea and Japan were the biggest customers.“L.N.G. is really the only supply element that is able to step up for the coming years” during the transition to more climate-friendly renewable energy sources, said James Huckstepp, head of European gas analysis at S&P Global Commodity Insights.Although the United States and Qatar, the biggest producers of L.N.G., are ramping up operations, it will take at least a couple of years to significantly increase capacity. So businesses and households are bracing for high prices and painful shortages during the cold winter months. Governments have drawn up emergency plans to cut consumption and ration energy amid dark warnings of social unrest.Marti Haal, the founder and chairman of the Estonia energy group Alexela, shakes his head at the feverish race to construct liquefied natural gas terminals. He and his brother, Heiti, proposed building one more than a dozen years ago, arguing that it was dangerous for any country to be solely dependent on Russia for natural gas.“If you would talk with anyone in Estonia in 2009 and 2010, they would call me and my brother idiots for pursuing that,” Mr. Haal said. He was driving his limited-edition Bullitt Mustang, No. 694, in Steve McQueen green, to the site of the terminal in Paldiski that his company is now building. He slowed down to point out the border of a restricted zone that existed before the Soviet Army left in 1994. When Moscow was in control, Paldiski was emptied of its population, turned into a nuclear training center and surrounded by barbed wire.The facility was met with shrugs when it was first proposed over a decade ago. Now construction is on a frenzied pace.Marta Giaccone for The New York TimesAs he drove on, Mr. Haal recalled the debate over building an L.N.G. receiving station: “Everybody we talked to said, ‘Why do we need diversification?’” After all, gas had been reliably arriving through Russian pipelines since the 1950s.Today the brothers are looking more like visionaries. “If at the time, they would have listened to us, we wouldn’t have to run like crazy now to solve the problem,” Mr. Haal said.Mr. Haal, who spent that morning competing in a regatta, always had an entrepreneurial streak — even under Communism. In 1989, as the Soviet Union was dissolving, he and his brother started building and selling car trailers. Mr. Haal said he would drag one on board the ferry to Finland — the fare to bring it by car was too expensive — and deliver it to a buyer at the Helsinki port. He collected the cash and then returned to pay everyone’s salary.When they started selling gas, they named the company Alexela — a palindrome — so that they would have to erect only one sign that could be read by drivers in both directions.Their L.N.G. venture at one point looked like a failure. As it turns out, the millions of dollars and years of frustration meant that when Estonia and Finland agreed in April to share the cost of renting an L.N.G. processing vessel and build floating terminals, the preliminary research and development was already done.In the months leading up to Russia’s invasion, Mr. Haal said, soaring gas prices had already begun to change the economics of investing in an L.N.G. terminal. Now, his major concern is ensuring that the Estonian government completes the pipeline connection to the national gas network on time.Over the years, the question of building more L.N.G. facilities — in addition to the two dozen or so already in Europe — has been repeatedly debated in ports and capitals. Opponents argued that shipping the chilled, liquefied natural gas was much more expensive than the flow from Russia. The required new infrastructure of port terminals and pipes aroused local opposition. And there was resistance to investing so much money in a fossil fuel that climate agreements had eventually targeted for extinction.One of the countries saying no was Europe’s largest economy, Germany, which was getting 55 percent of its gas from Russia.“The general overview was that Europe had more L.N.G. capacity than it needs,” said Nina Howell, a partner at the law firm King and Spalding. After the invasion, projects that had not been considered commercially viable, “and probably wouldn’t have made it, then suddenly got government support.”The first layer of reinforced concrete structure.Marta Giaccone for The New York TimesConcrete line pressure pipes.Marta Giaccone for The New York TimesEstonia, which shares a 183-mile border with Russia, is actually the European country least dependent on its gas. Roughly three-quarters of Estonia’s energy supply comes from domestically produced oil shale, giving it more independence but putting it behind on climate goals.Still, like the other former Soviet republics Lithuania and Latvia, as well as former Communist bloc countries like Poland, Estonia was always more wary of Russia’s power plays.Two days before the war started, the Estonian prime minister chided “countries which don’t border Russia” for not thinking through the risks of depending on Russian energy.By contrast, Poland moved to quit itself of Russian natural gas and began work in 2013 on a pipeline that will deliver supplies from Norway. It is scheduled to be completed in October. Lithuania — which at one point had received 100 percent of its supply through a single pipeline from the Russian monopoly Gazprom — went ahead and completed its own small L.N.G. terminal in 2014, the year that Russia annexed Crimea.Liquefied natural gas terminals are not the only energy source that European countries once disdained and are now compelled to explore. In a hotly disputed decision, the European Parliament last month reclassified some gas and nuclear power as “green.” The Netherlands is re-examining fracking. And Germany is refiring coal plants and even rethinking its determined rejection of nuclear energy.In Paldiski, enormous wind turbines are along the coast of the Pakri peninsula. On this day, gusts were strong enough not only to spin the blades but also to halt work on the floating terminal. A giant tracked excavator was parked on the sand. At the end of a long skeletal pier, the tops of 200-foot-long steel pipes that had been slammed into the seabed poked up through the water like a skyline of rust-colored chimney stacks.Paldiski Bay, which is ice-free year-round and has direct access to the Baltic Sea, has always been an important commercial and strategic gateway. Generations before the Soviets parked their nuclear submarines there; the Russian czar Peter the Great built a military fortress and port there in the 18th century.Now, the bay is again playing a similar role — only this time not for Russia.Remains of a Soviet-era bunker. The region that will boost the energy security of the Baltics was used as a nuclear training site when Moscow was in charge.Marta Giaccone for The New York Times More

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    When Home Is a Ferry Ship: An Influx From Ukraine Strains Europe

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    The duty-free shop on Deck 7 of the Isabelle has been turned into a storage locker and pantry, with suitcases heaped in the perfume section and refrigerated display cases crammed with labeled grocery bags. The ship’s shuttered casino has become the go-to hangout for teenagers. And the Starlight Palace nightclub on Deck 8 is where women meet to make camouflage nets for Ukrainian soldiers back home.“It makes me feel closer to them,” Diana Kotsenko said as she tied green, brown and maroon cloth strips onto a net strung across a metal frame, her 2-year old, Emiliia, tugging at her knees.For the past three months, Ms. Kotsenko and her daughter have been living on the Isabelle, a 561-foot cruise ship leased by the Estonian government to temporarily house some of the more than 48,000 refugees who have arrived in this small Baltic nation since the Russians invaded Ukraine in February.The ship, which once ferried overnight passengers between Stockholm and Riga, Latvia, is now berthed next to Terminal A in the port city of Tallinn, Estonia’s capital. Its 664 cabins house roughly 1,900 people — most of them women and children who come and go as they please through the ship’s cavernous cargo door.The residents are a tiny fraction of the more than 6.3 million Ukrainians who have streamed into Europe. Their lot is a sign of the strains that the flood of refugees is having on countries that have mostly welcomed them.Isabelle was leased from an Estonian shipping company, Tallink, in April for four months as an emergency shelter. But with nowhere else to put its residents, the government has extended the contract through October.The Isabelle cruise ship docked at the Tallinn harbor.Marta Giaccone for The New York TimesThe shortage of homes for refugees is creating intense pressure across the continent and Britain. Low-cost housing is scarce, and rents are rising.In Scotland, the government announced last month that it was pausing its program to sponsor Ukrainian refugees because of the lack of accommodations. In the Netherlands, scores of refugees have been sleeping on the grass outside an overcrowded asylum center in the village of Ter Apel. On Monday, the Dutch Council for Refugees announced plans to sue the government over shelter conditions that it said fell below the minimum legal standard.Of all the challenges facing Ukrainians who escaped to safe havens, the most pressing is access to housing, according to a new report from the Organization for Economic Development and Cooperation. The problem of finding longer-term accommodation is expected to only worsen given rising inflation, the report concluded.Our Coverage of the Russia-Ukraine WarGrain Blockade: For the first time since Russia invaded Ukraine, a ship loaded with corn sailed out of Odesa, part of a deal officials hope will help ease food shortages around the world.A Hard Winter: As Russia tightens its chokehold on energy supplies across Europe, Ukraine, whose access to natural gas is also threatened, is bracing itself for the hardship ahead.Gay Rights: The lack of legal rights for partners of gay soldiers as well as the threat of Russia imposing anti-L.G.B.T. policies have turned the war into a catalyst for societal change in Ukraine.On the Ground: Russian troops are regrouping for an expected push to gain full control of the Donetsk region. But they also appear to be preparing forces for an attack in the south and are still pounding targets around the country.“Early evidence also suggests that a lack of housing is a primary motivation for refugees to return to Ukraine, in spite of safety risks,” it said.Governments — which were already struggling to house refugees and asylum seekers from other parts of the world — have set up emergency intake facilities, rented hotels and provided financial support to host households. But with reception centers overflowing, countries have been forced to scramble for other solutions. Schools, hostels, sports stadiums, cargo containers, tents and even cruise ships have become stopgap accommodations.The Starlight Palace nightclub on the Isabelle has become the spot where women meet to make camouflage nets for Ukrainian soldiers back home.Marta Giaccone for The New York TimesIn Estonia, the government enlisted Tallink, which had leased out its ships in the past as temporary housing for construction projects, military personnel and events. One housed police officers during a Group of 7 meeting in Britain last year. Another was chartered during the global climate conference in Glasgow last fall.The Scottish government turned to Tallink when it faced its own refugee housing crisis, and last week, the first group of Ukrainians moved into a Tallink ship docked in Edinburgh’s port.The Netherlands, too, is using cruise ships. In April, 1,500 refugees moved into a Holland America Line vessel docked in Rotterdam. Last week, the government’s asylum agency announced that it planned to charter two additional vessels from Tallink for seven months.The floating solutions have been greeted with skepticism or even hostility in some quarters. Before the Tallink ship arrived in Scotland, some news accounts breathlessly warned of the risks of a Covid-19 outbreak. The Dutch government came under scorching criticism for a now-abandoned proposal to put refugees on a ship anchored off the coast in open water, making it difficult for people to come ashore.In Tallinn, the Isabelle had been out of service because of travel restrictions since the pandemic began in 2020 before it was put to use for the refugees. Natalie Shevchenko has lived on it since April. She has searched for an apartment in town but hasn’t been able to find one she can afford.The cabin Natalia Shevchenko shares with another woman she did not previously know.Marta Giaccone for The New York TimesMs. Shevchenko, who started living on the ship in April, has been unable to find an affordable apartment.Marta Giaccone for The New York TimesDonations have included toys, clothes and baby carriages.Marta Giaccone for The New York TimesA psychologist from Kyiv, Ms. Shevchenko has been working with mothers and children onboard, helping them adjust. “When you live on a ship, it’s like a big community,” she said.On a recent evening, a steady flow of people entered or left the ship after a brief pause at the security desk to scan their identification cards. On Deck 8, diners lingered over coffee in the Grand Buffet. “The food is good,” Ms. Shevchenko said. “There’s a lot of desserts, cakes and ice cream.”In a lounge area, a dozen people sat in front of a television set watching the news from Ukraine. Cliques of chattering teenagers roamed the long decks or sprawled on chairs near the casino’s empty blackjack tables. Two floors below, near the staircase where strollers were parked, children spread out on the blue and white carpet to play games, while two giggling boys slid down a short brass banister under the watchful eyes of mothers.Residents of the ship gather in a lounge area to watch the news from Ukraine.Marta Giaccone for The New York TimesVolunteers have donated toys, clothes and baby carriages, and have organized activities and excursions. On Deck 10, refugees can meet with social service workers. Bulletin boards around the ship were filled with announcements in Ukrainian about summer camp, free exhibitions, and language and culture courses. The newly named Freedom School is scheduled to start classes in Ukrainian and Estonian in the fall. Players from an Estonian soccer club came on board last weekend to lead a practice clinic.When Ms. Shevchenko needs solitude, she escapes to one of the lower car decks. She shares a claustrophobic sixth-floor cabin and bathroom with another woman she did not previously know. The space between the beds is narrower than an airplane aisle. Bags, shoes and boxes are stuffed under the beds. A white rope crisscrosses the walls to hang laundry.“Here’s our kitchen,” Ms. Shevchenko said, pointing with a laugh to a shelf with bottles of water and soda. A flowerpot, a gift for her recent 34th birthday from the Estonian psychologists she works with, sits on the windowsill.“We’re lucky to have a window,” she said. Some cabins on lower decks don’t have one. It’s a problem for people who had to shelter underground in Ukraine, she said: “Some people have panic attacks.”Some of the residents of the ship have found jobs in the surrounding area.Marta Giaccone for The New York TimesA woman knitting on the top deck.Marta Giaccone for The New York TimesThe former duty-free shop on Deck 7 of the Isabelle is used as a storage room. Marta Giaccone for The New York TimesA few doors down is the cabin that Olga Vasilieva and her 6-year-old son share with another mother and son. The two women use the unfolded upper bunk beds to store toys, bags and snacks, and sleep with their children in the narrow beds below. Bigger cabins are reserved for families with three or more children.One of the benefits of living with so many other families is that there are lots of children to play with. “He has so many friends,” Ms. Vasilieva said, turning to Ms. Shevchenko to translate.Ms. Vasilieva wants to return home before the school year starts, but so far, it hasn’t been safe. Although she had two jobs in Ukraine, Ms. Vasilieva said, she doesn’t work now because she has no one to care for her son. She said she received roughly 400 euros a month from the Estonian government. About a hundred of the refugees work for Tallink, in kitchen and housekeeping positions. Others have found jobs in town.Inna Aristova, 54, and her husband, Hryhorii Akinzhely, 64, who arrived in May after a hard trek from Melitopol, work in a laundry sorting sheets and towels. They haven’t been able to find an affordable apartment.A billboard carries announcements about activities for families and children.Marta Giaccone for The New York TimesOlga Vasilieva lives in a small cabin with her son, German, 6, and another mother and son.Marta Giaccone for The New York TimesA room on the ship is used as a classroom.Marta Giaccone for The New York Times“I feel like a guest in this country,” Ms. Aristova said, “not home.”Tears filled her eyes. Her most acute anxieties center on her 21-year-old son, who is in the army. She doesn’t know where he is, a security precaution, but they try to text or speak as often as possible.“He is so young,” she said. “Every day I am thinking about him.” Ms. Shevchenko, who was translating, bent down to hug her.In the Starlight Palace, Ms. Kotsenko and a handful of mothers and teenagers worked on the camouflage nets, cutting strips of cloth and attaching them. When finished, the cover will be sent to the Kherson region in southeastern Ukraine to hide tanks from Russian bombers.Ms. Kotsenko also doesn’t know where her husband is stationed in Ukraine. She and her daughter escaped from the embattled city of Mykolaiv.Another woman from the same city pulled out her phone to show Mykolaiv on a map. An animated red burst marked the spot, indicating heavy fighting.She had just received a long text from her neighbor with a series of photos showing bloody corpses of people and dogs lying on the streets, killed by Russian shells that morning.Some of the women Ms. Shevchenko has counseled have told her that they have decided to return to Ukraine. But, she said, what “you dream about your home” may not match the reality.Inna Aristova and her husband, Hryhorii Akinzhely, arrived in May. “I feel like a guest in this country,” she said, “not home.”Marta Giaccone for The New York Times More

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    Germany Hopes to Outrace a Russian Gas Cutoff and Bone Cold Winter

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    Russian natural gas has fired the furnaces that create molten stainless steel at Clemens Schmees’s family foundry since 1961, when his father set up shop in a garage in the western part of Germany.It never crossed Clemens’s mind that this energy flow could one day become unaffordable or cease altogether. Now Mr. Schmees, like thousands of other chieftains at companies across Germany, is scrambling to prepare for the possibility that his operations could face stringent rationing this winter if Russia turns off the gas.“We’ve had many crises,” he said, sitting in the company’s branch office in the eastern city of Pirna, overlooking the Elbe River valley. “But we have never before had such instability and uncertainty, all at once.”Such sentiments are reverberating this week in executive suites, at kitchen tables and in government offices as Nord Stream 1, the direct gas pipeline between Russia and Europe, was shut down for 10 days of scheduled maintenance.Germany, the pipeline’s terminus and a gas transit hub for the rest of Europe, is the largest and most important economy on the continent. And anxiety that President Vladimir V. Putin may not switch the gas back on — as a display of brinkmanship with countries that oppose Russia’s invasion of Ukraine — is particularly sharp.“We have never before had such instability and uncertainty, all at once,” said Clemens Schmees, whose family has owned a foundry since 1961.Lena Mucha for The New York TimesIn Berlin, officials have declared a “gas crisis” and triggered an emergency energy plan. Already landlords, schools and municipalities have begun to lower thermostats, ration hot water, close swimming pools, turn off air-conditioners, dim streetlights and exhort the benefits of cold showers. Analysts predict that a recession in Germany is “imminent.” Government officials are racing to bail out the largest importer of Russian gas, a company called Uniper. And political leaders warn that Germany’s “social peace” could unravel.The crisis has not only set off a frantic clamber to manage a potentially painful crunch this winter. It has also prompted a reassessment of the economic model that turned Germany into a global powerhouse and produced enormous wealth for decades.Nearly every country on the continent is facing potentially profound energy shortages, soaring prices and slower growth. On Thursday, the European Commission cut its growth forecast for this year to 2.7 percent. In another sign of recession anxiety, the value of the euro dipped below the dollar this week.Still, “Germany is worse off than the eurozone as a whole,” said Jacob Kirkegaard, a senior fellow at the German Marshall Fund in Brussels.The Russia-Ukraine War and the Global EconomyCard 1 of 7A far-reaching conflict. More

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    Biden Seeks Price Cap on Russian Oil Amid Fears of Gas Shock

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    Negotiating and selling the plan is a crucial task facing Treasury Secretary Janet L. Yellen as she travels to Asia in hopes of averting $7 a gallon gasoline.WASHINGTON — Relief at the gas pump coupled with this past week’s news that businesses continue to hire at a blistering clip have tempered many economists’ fears that America is heading into a downturn.But while President Biden’s top aides are celebrating those economic developments, they are also worried the economy could be in for another serious shock later this year, one that could send the country into a debilitating recession.White House officials fear a new round of European penalties aimed at curbing the flow of Russian oil by year-end could send energy prices soaring anew, slamming already beleaguered consumers and plunging the United States and other economies into a severe contraction. That chain of events could exacerbate what is already a severe food crisis plaguing countries across the world.To prevent that outcome, U.S. officials have latched on to a never-before-tried plan aimed at depressing global oil prices — one that would complement European sanctions and allow critical flows of Russian crude onto global markets to continue but at a steeply discounted price.Europe, which continues to guzzle more than two million barrels of Russian oil each day, is set to enact a ban on those imports at the end of the year, along with other steps meant to complicate Russia’s efforts to export fuel globally. While Mr. Biden pushed Europe to cut off Russian oil as punishment for its invasion of Ukraine, some forecasters, along with top economic aides to the president, now fear that such policies could result in huge quantities of Russian oil — which accounts for just under a tenth of the world’s supply — suddenly taken off the global market.Analysts have calculated that such a depletion in supply could send oil prices soaring to $200 per barrel or more, translating to Americans paying $7 a gallon for gasoline. Global growth could slam into reverse as consumers and businesses pull back spending in response to higher fuel prices and as central banks, which are already raising interest rates in an effort to tame inflation, are forced to make borrowing costs even more expensive.The potential for another oil shock to puncture the global economy, and perhaps Mr. Biden’s re-election prospects, has driven the administration’s attempts to persuade government and business leaders around the world to sign on to a global price cap on Russian oil.It is a novel and untested effort to force Russia to sell its oil to the world at a steep discount. Administration officials and Mr. Biden say the goal is twofold: to starve Moscow’s oil-rich war machine of funding and to relieve pressure on energy consumers around the world who are facing rising fuel prices.To transport its oil to market, Russia draws on financing, ships and, crucially, insurance from Britain, Europe and the United States. The European penalties, as currently constructed, would not only cut Russia off from most of the European oil market but also from those other Western supports for its shipments. If strictly enforced, those measures could leave Moscow with no means of transporting its oil, at least temporarily.The Biden administration’s proposal would not affect the European ban, but it would ease some of the other restrictions — but only if the transported Russian oil is sold for no more than a price set by the United States and its allies. That would allow Moscow to continue moving oil to the rest of the world. The oil now flowing to France or Germany would go elsewhere — Central America, Africa or even China and India — and Russia would have to sell it at a discount.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    Gas Prices Around the World Threaten Livelihoods and Stability

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    “NO ES SUFICIENTE” — It’s not enough. That was the message protest leaders in Ecuador delivered to the country’s president this past week after he said he would lower the price of both regular gas and diesel by 10 cents in response to riotous demonstrations over soaring fuel and food prices.The fury and fear over energy prices that have exploded in Ecuador are playing out the world over. In the United States, average gasoline prices, which have jumped to $5 per gallon, are burdening consumers and forcing an excruciating political calculus on President Biden ahead of the midterm congressional elections this fall.But in many places, the leap in fuel costs has been much more dramatic, and the ensuing misery much more acute.Families worry how to keep the lights on, fill the car’s gas tank, heat their homes and cook their food. Businesses grapple with rising transit and operating costs and with demands for wage increases from their workers.In Nigeria, stylists use the light of their cellphones to cut hair because they can’t find affordable fuel for the gasoline-powered generator. In Britain, it costs $125 to fill the tank of an average family-size car. Hungary is prohibiting motorists from buying more than 50 liters of gas a day at most service stations. Last Tuesday, police in Ghana fired tear gas and rubber bullets at demonstrators protesting against the economic hardship caused by gas price increases, inflation and a new tax on electronic payments.Discontent over soaring fuel prices prompted angry demonstrations in Quito, Ecuador.Martin Bernetti/Agence France-Presse — Getty ImagesThe staggering increase in the price of fuel has the potential to rewire economic, political and social relations around the world. High energy costs have a cascading effect, feeding inflation, compelling central banks to raise interest rates, crimping economic growth and hampering efforts to combat ruinous climate change.The invasion of Ukraine by Russia, the largest exporter of oil and gas to global markets, and the retaliatory sanctions that followed have caused gas and oil prices to gallop with an astounding ferocity. The unfolding calamity comes on top of two years of upheaval caused by the Covid-19 pandemic, off-and-on shutdowns and supply chain snarls.The spike in energy prices was a major reason the World Bank revised its economic forecast last month, estimating that global growth will slow even more than expected, to 2.9 percent this year, roughly half of what it was in 2021. The bank’s president, David Malpass, warned that “for many countries, recession will be hard to avoid.”In Europe, an over-dependence on Russian oil and natural gas has made the continent particularly vulnerable to high prices and shortages. In recent weeks, Russia has been ratcheting down gas deliveries to several European countries.Across the continent, countries are preparing blueprints for emergency rationing that involve caps on sales, reduced speed limits and lowered thermostats.As is usually the case with crises, the poorest and most vulnerable will feel the harshest effects. The International Energy Agency warned last month that higher energy prices have meant an additional 90 million people in Asia and Africa do not have access to electricity.Expensive energy radiates pain, contributing to high food prices, lowering standards of living and exposing millions to hunger. Steeper transportation costs increase the price of every item that is trucked, shipped or flown — whether it’s a shoe, cellphone, soccer ball or prescription drug.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.“The simultaneous rise in energy and food prices is a double punch in the gut for the poor in practically every country,” said Eswar Prasad, an economist at Cornell University, “and could have devastating consequences in some corners of the world if it persists for an extended period.”In many places, livelihoods are already being upended.Dione Dayola, who drives a commuter jeepney in metropolitan Manila, said spiraling fuel casts had cut his daily earnings to $4 from $15. “How do you expect to live on that?” he said.Jes Aznar for The New York TimesThe livelihoods of many jeepney drivers in Manila have been wiped out.Jes Aznar for The New York TimesDione Dayola, 49, leads a consortium of about 100 drivers who cruise metropolitan Manila picking up passengers in the minibuses known as jeepneys. Now, only 32 of those drivers are on the road. The rest have left to search for other jobs or have turned to begging.Before pump prices started rising, Mr. Dayola said, he would bring home about $15 a day. Now, it’s down to $4. “How do you expect to live on that?” he said.To augment the family income, Mr. Dayola’s wife, Marichu, sells food and other items on the streets, he said, while his two sons sometimes wake at dawn and spend about 15 hours a day in their jeepneys, hoping to earn more than they spend.The incomes of Manila’s jeepney drivers have been diminished.Jes Aznar for The New York TimesSome jeepney drivers in the Philippines have taken to asking neighbors for donations.Jes Aznar for The New York TimesThe Philippines buys only a minuscule amount of oil from Russia. But the reality is that it doesn’t really matter whom you buy your oil from — the price is set on the global market. Everyone is bidding against everyone else, and no country is insulated, including the United States, the world’s second largest oil producer after Saudi Arabia.Persistently expensive energy is stirring up political discontent not only in places where the war in Ukraine feels remote or irrelevant but also in countries that are leading the opposition to Russia’s invasion.Last month, Mr. Biden proposed suspending the tiny federal gas tax to reduce the sting of $5-a-gallon gas. And Mr. Biden and other leaders of the Group of 7 this past week discussed a price cap on exported Russian oil, a move that is intended to ease the burden of painful inflation on consumers and reduce the export revenue that President Vladimir V. Putin is using to wage war.Price increases are everywhere. In Laos, gas is now more than $7 per gallon, according to GlobalPetrolPrices.com; in New Zealand, it’s more than $8; in Denmark, it’s more than $9; and in Hong Kong, it’s more than $10 for every gallon.Leaders of three French energy companies have called for an “immediate, collective and massive” effort to reduce the country’s energy consumption, saying that the combination of shortages and spiking prices could threaten “social cohesion” next winter.Mexico is using money it makes from the crude oil it produces to subsidize gas prices.Celia Talbot Tobin for The New York TimesIn poorer countries, the threat is more fraught as governments are torn between offering additional public assistance, which requires taking on burdensome debt, and facing serious unrest.In Ecuador, government gas subsidies were instituted in the 1970s, and every time officials have tried to repeal them there’s been a violent backlash.The government spends roughly $3 billion a year to freeze the price of regular gas at $2.55 and the price of diesel at $1.90 per gallon.On June 26, President Guillermo Lasso proposed shaving 10 cents off each of those prices, but the powerful Ecuadorean Confederation of Indigenous Nationalities, which has led two weeks of protests, rejected the plan and demanded reductions of 40 and 45 cents. On Thursday, the government agreed to cut each price by 15 cents, and the protests subsided.“We are poor, and we can’t pay for college,” said María Yanmitaxi, 40, who traveled from a village near the Cotopaxi volcano to the capital of Quito, where the Central State University is being used to shelter hundreds of protesters. “Tractors need fuel,” she said. “Peasants need to get paid.”The gas subsidies, which amount to nearly 2 percent of the country’s gross national product, are starving other sectors of the economy, according to Andrés Albuja, an economic analyst. Health and education spending was recently reduced by $1.8 billion to secure the country’s large debt payments.Businesses in Mexico City have struggled with natural gas prices, which have soared even as the government has used subsidies to defray gasoline increases.Celia Talbot Tobin for The New York TimesMexico’s president, Andrés Manuel López Obrador, is using money the country makes from the crude oil it produces to help subsidize domestic gas prices. But analysts warn that the revenue the government earns from oil can’t make up for the money it is losing by temporarily scrapping taxes on gas and by providing an additional subsidy to companies that operate gas stations.In Nigeria, where public education and health care are in dire condition and the state cannot ensure its citizens electricity or basic safety, many people feel that the fuel subsidy is the one thing the government does for them.Kola Salami, who owns the Valentino Unisex Salon in the outskirts of Lagos, has had to hunt for affordable fuel for the gas generator he needs to run his business. “If they stop subsidizing it,” he said, I don’t think we can even. …” His voice trailed off.Kola Salami owns the Valentino Unisex Salon in Lagos, Nigeria.Tom Saater for The New York TimesMr. Salami refills petrol in a generator to power his salon.Tom Saater for The New York TimesIn South Africa, one of the world’s most economically unequal countries, the rising price of fuel has created one more fault line.As President Cyril Ramaphosa campaigns for re-election at the ruling African National Congress’s conference in December, even the party’s traditional allies have seized on the cost of fuel as a failure of political leadership.In June, after fuel reached beyond $6 a gallon, a record high, the Congress of South African Trade Unions marched through Durban, a city already wrecked by violence and looting last year, and floods this year. Higher fuel prices have been “devastating,” Sizwe Pamla, a spokesman for the trade unions, said.A town near Durban, South Africa, which was hit by devastating floods this year, drew protests when fuel prices spiked.Rajesh Jantilal/Agence France-Presse — Getty ImagesThe dizzying spiral in gas and oil prices has spurred more investment in renewable energy sources like wind, solar and low-emission hydrogen. But if clean energy is getting an investment boost, so are fossil fuels.Last month, Premier Li Keqiang of China called for increased coal production to avoid power outages during a blistering heat wave in the northern and central parts of the country and a subsequent rise in demand for air conditioning.Meanwhile, in Germany, coal plants that were slated for retirement are being refired to divert gas into storage supplies for the winter.There is little relief in sight. “We will still see high and volatile energy prices in the years to come,” said Fatih Birol, the executive director of the International Energy Agency.At this point, the only scenario in which fuel prices go down, Mr. Birol said, is a worldwide recession.Reporting was contributed by More

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    Gas Prices Force Many to Rethink Driving, and Spending

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    As summer trips beckon, some are traveling less, at least by car. And those candy bars at the convenience store may find fewer takers.KATY, Texas — Most Americans would gladly pay the $4.29 for a gallon of regular gas Buc-ee’s was charging this week on Interstate 10 between Houston and San Antonio, more than 50 cents below the national average.But with prices more than $1.50 a gallon higher than they were a year ago, even Texans are complaining, and changing their buying habits to make do.“It makes me so stressed out just thinking about buying gas,” said Nancy Oncken, a retired kindergarten teacher, as she filled up her station wagon on her way to join five cousins at a water park outside San Antonio for the long weekend. “It’s now always in the back of my mind to be conservative about what I buy.”When Ms. Oncken drives through Buc-ee’s, the well-known Texas-scale convenience store with enough gasoline pumps to fuel an army, she often buys a souvenir bumper sticker, tumbler or key chain adorned with the cartoonish bucktoothed beaver wearing a baseball cap. But this year, she said, she will keep a grip on her wallet.Drivers will get a bit of a break this Fourth of July weekend now that gasoline prices have eased about 15 cents a gallon over the last two weeks. But with the Russian invasion of Ukraine settling into a grinding war of attrition, constraining global energy supplies, gas prices are not likely to decline much more this summer.At $4.86 a gallon on Thursday, the national average price for regular gas was $1.67 above a year ago, according to the AAA motor club. The fuel prices are altering buying patterns, and there are early signs that people may be rethinking their driving.Economists report that travel spending remains strong this year because of pent-up demand after two years of the Covid-19 pandemic. But interviews with drivers at Buc-ee’s in Katy, Texas, suggest that consumer confidence is beginning to erode under the pressure of high prices for fuel, food and housing. Ms. Oncken and several others said the holiday weekend might be the only vacation they would take this summer, a sharp break from the past.A recent report by Mastercard SpendingPulse, which monitors national retail sales, showed that despite a roughly 60 percent increase in gasoline prices from last year, total spending at gas station convenience stores was up only 29 percent, suggesting that many like Ms. Oncken are compensating for gas prices by saving on little, whimsical indulgences.“Opting for a lower fuel grade, driving a bit less or skipping that slushy or candy bar in the store are part of a bigger picture of choices consumers are making every day in the face of higher prices,” said Michelle Meyer, U.S. chief economist at the Mastercard Economics Institute.The shock is particularly acute given that people grew accustomed to low gasoline prices during the pandemic, when oil prices collapsed from the decline in commuting and other economic activity.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.It will take several months, at least, to sort out all the effects of higher prices on consumer behavior. People are spending more at restaurants than a year ago, and sales of luxury goods remain high, according to Mastercard. But hotel industry executives say many who drive on vacation are choosing destinations closer to home to save on gas.That may be one reason for the modest drop in gasoline prices in recent weeks. Recent Energy Department data suggested that the volume of gasoline sold nationwide had dropped 2 percent or more from a year earlier. And auto dealers in Houston said customer interest in more fuel-efficient cars, as well as electric and hybrid vehicles, was growing, although shortages of parts have limited the supplies of new models.Some transportation and energy experts say the demand for gas has declined partly because more people are flying rather than driving on vacations this year than last, although rising ticket prices and airport delays may reverse that trend as the summer progresses. In some cities, more people are returning to mass transit as concerns over Covid ease.Inflation and a slowing in some areas of the economy may mean some businesses are cutting back on shipping or shortening their supply chains when possible to save fuel.Energy Department data suggested that gasoline sales had dropped 2 percent over the last year.Scott McIntyre for The New York TimesGiovanni Circella, a transportation expert at the University of California, Davis, said that over the years, short periods of high gas prices had not fundamentally changed driving habits since people still needed to commute to work and carry on daily chores like shopping and driving their children to school and activities.“But what will change is if the gas prices stay high for an extended period of time, Americans will start changing the type of cars they drive,” he said.A report released this week by RBC Capital Markets found that over the last 30 years, retail gasoline prices in the United States increased more than 30 percent year over year during 39 individual months. Of those months, demand fell 2 percent or more from the previous year only 12 times. “In short, protracted demand destruction events have historically been rare,” the RBC report concluded.Inflation F.A.Q.Card 1 of 5What is inflation? More