Debate Magazine

Russian Gas: Monopsony Vs Monopoly*

Posted on the 22 April 2014 by Markwadsworth @Mark_Wadsworth
From The Daily Mail Energy prices in Britain will rise unless urgent action is taken to prevent Russia holding countries to ransom by cutting off gas supplies, a minister has warned.  Energy Secretary Ed Davey warned aggression from Russian President Vladimir Putin could quickly force up costs for families in the UK. Energy security will be high on the agenda of a meeting of the G7 meeting in Rome early next month.  A quarter of Europe's gas comes from Russia, half of which passes through Ukraine which has been the focus of mounting tensions after the Crimea region was annexed by Moscow.  Last week President Putin insisted it was 'impossible' for Europe to stop buying gas from Russia... According to Wiki, European Union countries use 460 bn m3 a year, so they import about 115 bn m3 from Russia. Russian exports are 173 bn m3 a year, so two-thirds of that goes to Europe.  So we are dependent on them - but they are equally dependent on us. If the EU, or European countries acting in concert, really wanted to do something they would learn the lessons of Thatcher and the miner's strike and simply set a cap on the price which they are all willing to pay for imports of gas, which can be any figure they like, as long as it exceeds the extraction and transport costs.  (The only reason why the EU/European governments wouldn't do this is if a lot of the senior people are in the pocket of Russian oligarchs, which they probably are, it is certainly true for German politicians.)  Sorted. * OK, technically that is probably oligopsony vs oligopoly.

Back to Featured Articles on Logo Paperblog