UnNatural Gas and the Ukraine

The Ukraine was poised to do a deal with the EU and the IMF in an attempt to dig itself out of a financial hole. Citizens of the Ukraine were of the view that getting closer to the EU would give them a more European lifestyle. I guess they aren’t aware of Portugal, Italy, Greece, and Spain; they didn’t know about Cyprus, which had all bank deposits over a limit taxed at twenty percent. (This to get the IMF and the EU to lend them money.)

When the Ukraine leaned toward Moscow, there were disturbances. However in the end Moscow (and Vladimir Putin) prevailed. How was this done? By providing fifteen billion (US Dollars I assume) in loans. In addition, the cost of natural gas to the Ukraine was dropped considerably. You can read details of this here.

One thing about this deal disturbs me. The Ukraine gets roughly a one-third cut in natural gas prices, to some $268.50 USD per thousand cubic metres. I thought that was still a pretty high price, so I searched about for the price of natural gas in Canada. My memory is that I found some fourteen cents per cubic metre, or $140.00 CAD per thousand cubic metres. Here is a website which more or less corroborates this figure.

So much for the observation. Now for the dumb question:

A lot of natural gas passes through the Ukraine, and the Ukraine siphons off some money for that transit. Good for them. But given the price, do we think that Russia has an effective monopoly over those European nations which buy its natural gas exports?

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