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The Impact of the Oil Price Decline on the Soviet Union and Eastern Europe

The effects on the Soviet Union and Eastern Europe of the decline in the world market price of oil (and the subsequent likely decline in international prices of natural gas and coal) can be divided into three groups: direct, or first-round effects-the impact of the decline in net hard-currency export revenue/net import outlays for oil and other types of energy;"spillover" effects-the impact of potential Soviet cutback in the quantity of energy sold to Eastern Europe for nonconvertible rubles and at preferential prices; indirect, or secondary effects-the impact of oil price cuts on world market interest rates and thus the cost of debt servicing; the impact on Western economic recovery and thus the demand for imports from the Eastern bloc, and so on.

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Energy Specializations: Energy Access – Sustainable Development and Distributed Energy; Petroleum – Markets and Prices for Crude Oil and Products; Energy Security and Geopolitics – Other

JEL Codes: Q40: Energy: General, Q41: Energy: Demand and Supply; Prices, Q35: Hydrocarbon Resources, Q38: Nonrenewable Resources and Conservation: Government Policy

Keywords: Oil price cuts, Economic impacts, Eastern Europe, USSR

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No3-2

Published in Volume 4, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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