The Big Discussion at VoxUkraine: Gas prices

What do VoxUkraine economists think of Lyashko’s ideas on gas prices

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Once again, Lyashko argues that domestically produced gas should be sold to the public at “domestic” prices.

VoxUkraine has repeatedly explained (for instance, here and here), hy different gas prices for different categories of consumers and cross-subsidies are harmful to the economy. Let us remind you that in 2014 the deficit of Naftogaz exceeded the deficit of Ukraine’s state budget, and now it is reduced to almost zero. The next step of reforming the energy market must be monetisation of the “energy subsidies” so that consumers are motivated to save energy.

It’s wrong to assert that people should receive “state” gas at special low prices. All Ukrainian citizens are indirect co-owners of the Ukrgazvydobuvannya (UGV), but not all of them consume gas. Even those who directly consume gas, do so in very different amounts — usually large houses (mainly owned by people with high incomes) consume much more than small ones. That’s why setting low tariffs for everyone means to support of [the rich] gas consumers at the expense of the rest of society — because losses of public companies are funded at the expense of taxpayers.

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The authors do not work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations