The Russian Bear Roars Again

The Guardian reports that Russia is more than doubling its gas price to Lithuania compared to a year ago, to 833 Lt (or 354USD) per 1000 cubic metres. This is with the aim of bringing all former Soviet states in line with European gas prices. Lietuvos Dujos, our gas company, is absorbing some of the increase and has fixed this year's increase to consumers at 'only' 71%.

One might hope that once this increase is through, the spook might be over and we might get more moderate increases in the future. Then again, Lithuania is totally dependent on Russian gas, and relationships with Russia are not happy (slightly a blind spot with our diplomatic Mr Adamkus, but we've also had bad experiences with rich Russians living in Lithuania, who have attempted to buy either elections [Mr Uspaskich] or a president [Mr Borisovas who bought Mr Paksas]). But of course for consumers, given the absorption of this year's rise, it'll continue for another year or two.

It'll do wonders for inflation.....how can pensioners continue to live in the sometimes large flats that they have lived in all their lives? Though perhaps on another front the tide is turning, and while for a long time pensioners supported their unemployed adult children, now the children are often working and can support their parents?

The ownership of Lietuvos Dujos is interesting - it's owned 38.9 per cent by E.On Ruhrgas (German) and 37.1% by Gazprom. So Gazprom (Russia, with the delightful Mr Schroeder, ex-German Chancellor as advisor) is causing Gazprom (Lithuania) a considerable drop in profits while it absorbs price increases - I'm not sure that worries me a great deal. Then again, it seems the Lithuanian state owns the remaining 24%, so that's another impact on the budget. Would competition in this tiny market help, if there were more suppliers - but we can only get gas from Russia? If I were Lithuanian, I would not let Russian big business own anything in the country. Then again, if Gazprom did not own part of the business, would that make it even easier for Russia to play silly beggars with Lithuanian prices?

It's a pain, being totally dependent on someone!