Ukraine recorded one of the sharpestdeclines in poverty of any transition economy in recentyears. The poverty rate, measured against an absolutepoverty line, fell from a high of 32 percent in 2001 to 14percent in 2004, and then again to 8 percent in 2005. ThisUpdate presents simulations of the direct influence of anincrease in energy prices on the poverty rate. Using 2005 asa base period, the simulations estimate the poverty ratesthat might result from alternative increases in the price ofenergy. In this simple model, the main determinant of theimpact of the increase in energy prices on poverty is theshare of energy in total household expenditures. An increasein energy prices will harm the poor slightly more than therich because the poor have a slightly higher share of energyin their expenditures.