The Russian Federation - the European economy’s future powerhouse? : An Econometric Analysis of the Energy Import Relationship Between Seven European Key Countries and the Russian Federation

Abstract: The purpose of this thesis is to analyze how the world market price of crude oil, coal and natural gas affects the demand of and dependency on energy imports from the Russian Federation of key European countries[1]. We achieve our objective through econometric estimations of import demand equations concerning imports from the Russian Federation of crude oil, coal and natural gas for seven EU key countries during 1990-2014.Three out of twenty-one models were found to be statistically significant for both the spot price- and income elasticity. The spot price elasticities for the models where: coal import demand for Finland (-0.49), crude oil import demand for Italy (-0.44) and the Netherlands (-0.42). The income elasticities for the aforementioned models were found to be: Finland (2.58), Italy (5.85) and the Netherlands (7.62). The remaining models were statistically insignificant presumably due to different internal structures in the data or due to the assumption of perfect substitute model. [1] EU key countries include: Austria, Finland, France, Germany, Italy, Netherlands, and the United Kingdom.