Director of the National Economic Council Brian Deese joins Yahoo Finance Live to discuss volatility in the oil market, the Biden administration's ban on imports of Russian oil, federal oil permits, and the energy transition away from fossil fuels.

Video Transcript

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JULIE HYMAN: President Biden yesterday announced a ban on Russian oil imports. And he also had a message for Americans with regard to gasoline prices. Prepare for them to go higher.

JOE BIDEN: Putin's war is already hurting American families at the gas pump. Since Putin began his military buildup in Ukrainian borders, just since then, the price of the gas at the pump in America went up $0.75. And with this action, it's going to go up further. I'm going to do everything I can to minimize Putin's price hike here at home.

JULIE HYMAN: Joining us now is Brian Deese. He's Director of the National Economic Council. Brian, it's great to see you. So where is the administration in terms of what more it can do? We earlier talked to an energy analyst who said there aren't too many more levers that you can pull. What are the remaining levers and where are you in the process of pulling them?

BRIAN DEESE: Well, first, I would underscore the point that you just played from the president, which is, this step that the president announced yesterday to ban imports of Russian oil, gas, and coal comes on top of a unprecedented unified set of sanctions imposed on the Russian economy, that is crippling that economy. At the same time, we are looking at everything that we can do to mitigate the impacts here at home, including, obviously, the price of gas at the pump.

First, we are working with our international allies, who have reserves and stocks of oil, to try to bring that collectively onto the market. We announced two weeks ago a $60 million barrel coordinated release through the IEA, the International Energy Agency, And we are in active discussions with that group about how and when we can do more. Those stocks are designed for supply disruptions that affect the global economy and that's clearly what we're dealing with now.

The second thing I would point to is, making sure that consumers are not taken advantage of. And the president referenced this yesterday. It's at moments of volatility like this that you worry the most about gas stations taking advantage of the situation and driving up prices, particularly in the near term, based on oil they already have in reserves. Those are the kinds of things that we've got our regulatory bodies, the FTC and the CFTC, looking closely at.

JULIE HYMAN: And Brian, maybe you can help me understand as well something that I've been trying to sort of cut through, which is that on the one hand, we have members of the oil industry, CERAWeek, which is a big conference in that industry going on right now in Texas, saying the administration didn't give us enough oil permits. Or there are things that are constraining us from drilling more, and there's also a lag effect when we start drilling and actually produce product.

The administration-- various officials, have been pushing back and saying, it's not on the administration. We have been issuing permits. What-- What's your message to the US oil industry on this front?

BRIAN DEESE: Well, our industry operates in a capitalist system, in a market economy. And those producers respond to supply and demand and price in the market. And right now there is no constraint for domestic producers to increase production here in the United States. And in fact, that's what we're seeing happen. We're seeing production increase, up about 700,000 barrels a day from where we were last year and projected to increase more. That's point one.

Point two is, the vast majority of production in the United States does not happen on federal land. So federal permitting is actually not even relevant, 90% it's not even relevant. For that remaining 10%, we're in a situation right now where there is a historically high number of already issued permits.

So these are already legally in the hands of the companies, about 9,000 of them. They've paid for them and they now have access and can utilize them, if they choose to do so. The companies have complicated decisions about maintaining capital discipline. And in the wake of what happened in the pandemic, we are seeing almost across the board those companies now increasing production. But there's no constraint to them doing so in the short term.

BRIAN SOZZI: Brian, should this be an awakening moment for American citizens? Should they be out there, just given the high energy costs, considering solar? Should they transition from their gas-powered car to EVs? This this the moment where they tighten their own belts and cut back on their energy consumption.

BRIAN DEESE: Well, here's what I would say. In the short term, we absolutely recognize that people are needing to drive to get to work and get to the grocery store, And when the price of gas goes up, that hits people in their pocketbooks, which is why we're doing everything we can in the short term. But over the longer term, this crisis should underscore that the only way to reduce our dependence on oil is to use less oil.

And the good news is the market is moving aggressively in that direction. We have all of the major auto companies saying they are moving to an electric vehicle future. We as an administration are doubling down on the ability to build those vehicles here, create more jobs here at home.

So if this crisis is going to teach us anything, it's that over the long term, the only real energy security comes from reducing our economy's dependence on oil and other fossil fuels, and we can do that over the long term. We have strategies to do that and the market is racing in that direction. And certainly for those people who want to make a choice, those choices in the market today, they have many more choices than they would have even just a couple of years ago.

So that is the long term future. We know that's the future. And we need to do everything we can to accelerate that.

JULIE HYMAN: So if that's the long term goal, I want to bring it back to short term for just a second. Because we're seeing various strategists, economists on Wall Street, some of whom, certainly it's not a consensus, but some of whom are raising the threat of stagflation right now, because of this shock that we are seeing from not just higher energy prices, by the way. Of course, higher grain prices, right, higher metals prices, and as that trickles through. How concerned are you about a recession in the United States? And what does the administration have in its arsenal in order to try to combat that?

BRIAN DEESE: Well, as you mentioned at the top of the show, Putin's price hikes are having an impact and they're going to have an impact. And as the president said, we're going to do everything we can to mitigate it, but there are costs to his completely unjustified aggression in Ukraine. I would say in terms of the economy what's notable is extraordinary resilience of the American economy, even through these uncertain periods.

You know, we've been through multiple waves of the pandemic. We now have an unprecedented geopolitical situation. And what you see is historic strength in the labor market continuing, the American consumer and consumption holding up. So there are risks, absolutely, for sure, but really what's notable is the resilience of the American economy uniquely among global economies.

So to your question about what we do going forward, the best thing we can do is provide direct relief to American families, lower their costs, and do so in a way that actually lowers the deficit at the same time. That will ease inflationary pressures over time while actually addressing some of the pocketbook concerns that individual families are facing, and that could provide a headwind to the economy.

JULIE HYMAN: Brian, thank you so much for being here and talking to us about all of these important and very pressing issues for Americans. Brian Deese is Director of the National Economic Council. Good to see you, Brian. Thank you.