Winter is upon us, and the last couple of days have seen rumors rumbling about the possibility of another gas interruption – due to payment problems at Ukraine’s end.  It is alleged that Ukrainian Prime Minister Yulia Tymoshenko alerted Vladimir Putin to the fact that President Viktor Yushchenko was impeding ‘the normal partnership between the Central Bank, which had the gold reserves at disposal, and the government’, thus jeopardizing payment.

The good news for those in Europe looking forward to a toasty winter is that analysts are suggesting that this talk is more hot air fueled by political rivalry between Viktor Yushchenko and Yulia Tymoshenko (who will race each other ,along with Victor Yanukovych, to the post of President in January) than the rhetoric of a veritable potential pipeline freeze.

Jason Forbes on Reuters comments on why the situation is unlikely to escalate:

A new gas war with Ukraine would be highly damaging for Russia economically. The last dispute is estimated to have cost Gazprom (GAZP.MM), the state-controlled group, $1.5 billion in lost revenues, not to mention the damage to its reputation and the loss of market share that resulted.  Russia also has a strong political incentive to go easy on Ukraine. With Yushchenko almost certain to be replaced by a more pro-Moscow politician, the Kremlin has every reason to be satisfied with the way things are going. A renewed gas war on the eve of the election would just complicate matters.