I have to admit that my first thought upon reading this heading, “Putin Aims His Energy Weapon At Ukraine,” was not “lasers!” That was my second thought.
Anyway, if the article had stopped there, with that sentence, I would not be writing this. Unfortunately it went to argue that Russian gas price hikes against Ukraine might not work because winter is ending and Europe is more resilient than it used to be. Note how the author dropped any discussion of the effect of a price hike on Ukraine.
I humbly submit that the fact that Europe is relatively invulnerable to a gas cut-off right now is a feature, not a bug. It means that the Russians can extract rents from Ukraine and cut them off if they don’t pay without worrying about European public opinion. (In the short-run, Gazprom’s contracts mean that in the absence of official sanctions Western customers will pay even if they cannot take possession of the gas.)
If Ukraine pays, it will hurt. The rise is from $8.38 per MMBTU to $15.18. In 2012, Ukraine imported 1.2 billion MMBTUs ... putting the additional cost in the order of $9 billion. That will hurt. Even if Ukraine can keep reducing its gas consumption, that will hurt. And if the taps are shut off because Ukraine doesn’t pay, that will hurt more. As the above-linked article points out, E.U. countries can ship enough gas to Ukraine to meet about 25 percent of its summertime demand, but that’s it ... and we don’t know at what price. (There is more pipeline capacity to Ukraine, but Gazprom controls them. Which means that it won’t allow gas to flow eastwards unless European governments expropriate the Russian company.)
In short, I have no idea why the article was subtitled, “Moscow is jacking up gas prices to cow Kiev and scare Europe. It may not work this time.” It may not scare Europe and it may not cow Kiev, but neither is the point.
Last point: you have to love the fact that Moscow is justifying the price hike by saying that the Ukrainian rebate was compensation for the use of Sevastopol, and now that Sevastopol is Russian territory they no longer need to grant it. Wait ... what?