Eastern European countries dependency on Russia’s natural gas would be notable since the turn of century making Russia a 31% exporter of oil to the world. After World War II, and the burning of the Baku oil fields in the early 1900s due to protests, Russia realized by the 1950s that their mass production of oil, and low price strategies they could be a dominant force in the suppliers of these resources. During uproar in the Middle East during the 70s and 80s gas prices began to rise, however, Russia maintained gas prices at a cost of 50% less than that of it’s Middle East counterpart(Goodrich, 2014). Most of central Europe began to depend on Russia due to the accessibility, contracts with Russia that allowed for loans on oil exports, and the need for Russia to hold off western pressures due to sanctions.
According to Goodrich, 2014:
Energy revenues make up half of the government’s budget. This capital influx was and continues to be instrumental in helping Russia build the military and industrial basis needed to maintain its status as a regional — if not global — power.
Beyond export revenues, the energy sector has contributed to the creation of a domestically stable and industrialized state. Russia’s domestic energy consumption is very high (Links to an external site.) due to extremely cold weather for most of the year, but despite inefficiencies within the energy sector and the cost of producing energy, the country’s domestic reserves have enabled Moscow to provide its citizens and the industries that employ them with low energy prices.
This explains why Western Europe and Russia have an indifferent relationship. In fact in 2010 about 34.5% of Ukraine’s oil was imported from Russia(Kennedy,2014) Russia needs the revenue, and Europe can’t get the energy resources at a better rate. Russia’s physical connectivity with Europe and ability to undercut any competitors have served as the basis of many of Moscow’s relationships in Europe(Goodrich, 2014). Moving forward Ukraine and other Eastern European countries are looking for other ways to bypass Russian oil imports by getting alternate pipelines, and looking to innovate other renewable energy sources. In the long run this long standing relationship if terminated may be harmful not only to the Russian economy, but also various European nations who can’t afford to get these resources in other places.
Goodrich, L. (2013, February 12).The Past, Present, and Future of Russian Energy Strategy. Statfor Retrieved from https://worldview.stratfor.com (Links to an external site.)
Kennedy, B.(2014, March 4). Ukraine Crisis Highlights Europe’s Dependence on Russian Energy. CBS News. Retrieved from https://www.cbsnews.com
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