Cuba's Transition to Market-Based Energy Prices

Since 1960 the Soviet Union has been, for all practical purposes, Cuba's exclusive supplier of energy products. For certain time periods, Soviet sales of oil and oil products to Cuba were made at concessional prices; prior to 1991, they were priced using transferable rubles and were essentially bartered for Cuban goods, especially sugar. Effective January 1, 1991, the Soviet Union shifted to world market prices and convertible currency payments for all traded commodities, including energy products. The shift to market prices and convertible currencies in CubanSoviet energy trade has already brought-or is likely to bring a number of adjustments in four areas: 1) the trade balance; 2) the ability to reexport oil and oil products; 3) energy consumption patterns;. 4) and the structure of energy supplies.