The Russian economy (catch all)

[Firn]

Over and above the debt issue, one wonders about future loss of revenue to Gazprom. Econ 101 and price theory-- as price goes up demand goes down unless the demand is inelastic. Particularly with warmer weather coming to the region, how inelastic is Ukrainian natural gas demand?

That's a good question. We already a nice graph of the Ukrainian energy consumption:



Now I found a stunning graph showing the increasing spread between the gas import price and the price payed by private costumers. Needless to say that the subventions became an increasingly heavy burden for the Ukrainian budget...



A good short-term comparision with West European and US prices:



Not much Russian favour for it's little brother under 'friendly' leadership...

Market prices for private costumers should more then double if you take into account the subvention cuts and the new Gazprom prices. Under such conditions demand will fall a lot. In the long run it is of course considerably more elastic then in the short term. The sommer months should help of course to tackle some issues. So far the industry seems responsible for most of the fall in demand since the fall of the SU, especially after 2005. A drastic case in point is the 2009 crash, prior to that the steel industry in the East did actually pretty well.

Gas contracts are an interesting topic of which I don't know much. In the past it seemed that Gazprom tried to protect it's long term revenue, cutting for example prices for E.ON IIRC from a higher contract one because it had it's margins squeezed there badly. This doesn't seem to be the case when the primancy of politics calls from Russia with love...