Ukraine’s Interim Prime Minister Arseniy Yatsenyuk is, as ever, outraged at the Russian government, declaring the announcement of a massive price increase by Russia’s Gazprom “absolutely unacceptable.”
The Gazprom increase amounts to roughly 80% over the previous year’s costs, and Yatsenyuk insisted there was “no reason” other than politics for the company to impose such an increase.
The reality, however, is that Gazprom had been providing gas to Ukraine at an enormous discount during the Yanukovych government, and the ouster of the pro-Russian president and his replacement with a pro-West faction gave Gazprom an excuse to ditch the discount.
Gazprom had already shaved off part of the discount last month, citing Ukraine’s unpaid gas bills, and today brought it up to $485 per 1,000 cubic meters, virtually the same price they charge Germany.
Ukraine officials are calling “emergency talks” with the European Union trying to get them to start ponying up heavily subsidized natural gas to replace Gazprom. Some countries may be willing to do so on a limited basis, but with so many of them similarly on the hook to Gazprom for much of their supply, it is unlikely the EU is going to willingly provide such discounts to Ukraine in the long run.
The White House was critical of the Gazprom price increase, calling it “coercive” and demanding that the markets be allowed to set the price of natural gas. The White House was not questioned on the fact that the new Gazprom price is, essentially, the same as the market price across Europe.