Finance Writer Wood: US Taxpayers on Hook for Ukraine's Gas Tab

Tuesday, 17 Jun 2014 03:30 PM

By Sean Piccoli

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On top of bracing for U.S. pump prices to climb because of chaos in Iraq, American taxpayers will also have to cover cash-strapped Ukraine's gas bill, global finance writer L. Todd Wood told Newsmax TV on Tuesday. 

Russia officially shut off Ukraine's gas supply on Monday amid a dispute over prices and with Moscow-armed separatists defying Kiev's rule.

But Ukrainians still have access to the Russian pipeline that runs through Ukraine enroute to Europe and supplies gas to both customers, Wood told "MidPoint" host Ed Berliner.

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So when Ukraine needs gas, said Wood, "They'll take it from that pipeline and Europe will be shorted … and Russia can't stop them."

"The question is whether Russia will be paid for it," he said.

Enter the U.S. and European Union. As Wood explained, Ukraine is already behind on disputed payments to Russia's state-owned gas giant, Gazprom, and has no means to pay for any more fuel — authorized or not — drawn from Gazprom's trans-Ukraine pipeline.

"What's going to happen is, the United States is going to have to step up, and Europe … and the money is going to go right from the U.S. taxpayer to Moscow — to Gazprom."

Meanwhile, U.S. consumers could see gas prices "easily" top $4 a gallon — up from an average price of around $3.70 a gallon now — before the end of the year "if we continue to have a shooting war in Iraq, which it looks like we'll have."

The Middle East "is where we still get the bulk of our oil," said Wood. "Even though our domestic production is rising, there is still oil that needs to flow through the [Gulf] straits. So that definitely impacts the price of oil in the short term."

Wood added, "Our government is actually not doing much to bring the price down."

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