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What do you mean by the price is "real"? Both the nominal gas price and the nominal transit price are low by international standards. There are good arguments to augment both. They have been set simply to offset one another and have no economic value per se.

So "commercial" terms would mean oil-indexed prices for the gas, and "what the market will bear" for transit fees. Ukraine, having absolute control over Russian exports, can capture the rent and set whatever transit price it wants. The current status quo (25 bcm/y of gas vs transit rights) is a great deal for Russia - this is not what this dispute is about.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Jan 2nd, 2006 at 09:30:18 AM EST
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