A new energy crisis is looming over Europe and Greece, threatening household budgets, inflation, and businesses’ operating and production costs.
The current conditions in the energy market in Europe and Greece are reminiscent of 2022 when Russia invaded Ukraine, at a time when Europe was highly dependent on Russian gas, and shut-off the gas supply pipelines to EU member states.
Record Prices Fuel an Energy Crisis
The energy market remains short of supply. The war in the Middle East has damaged energy infrastructure in Persian Gulf countries, limited exports of Russian oil and low natural-gas reserves in European storage facilities (now at 67%), pushing up prices. The big problem with limited supply and increased demand concerns petroleum products.
Brent crude oil is trading above $100 per barrel while the price of natural gas has almost tripled to 80 euros per Megawatt hour compared with the period before the Gulf war.
Prices at the Pump
Liquid fuel prices continue their upward trajectory. The average price of unleaded gasoline has skyrocketed to 2.12 euros per liter, while in the country’s prefectures it exceeds 2.33 euros per liter. The average price of diesel has skyrocketed to 2.077 euros per liter, but in parts of the country it reaches astronomical levels of 2.28 euros per liter. The highest fuel prices are recorded in the Cyclades.
Since the start of the war in the Middle East on February 28, the average price of diesel has increased by 0.512 euros per liter, while gasoline has increased by 0.369 euros per liter.
The successive diesel subsidies provided by the government, combined with refinery discounts since last spring, look like “aspirin” for consumers and businesses facing an acute problem. Yet the outlook remains bleak.
Electricity Hits New Highs
The rally in the price of natural gas has also triggered a domino effect of electricity price increases. For today, the stock market price (day-ahead purchase) in electricity is at 186.76 euros per Megawatt hour. This is one of the highest prices over the past twelve months. Record electricity prices have been recorded since the beginning of the month.
If analysts’ forecasts of 100 euros per Megawatt hour in the coming months prove accurate, electricity prices will remain at elevated levels through the winter.
Concern Over Heating Oil
The greatest concern is the cost of heating for households, particularly heating oil, which is used by most households. If diesel remains at current levels on October 15, when the heating-oil season opens, then heating oil could start at a price of 1.80 euros per liter, compared to its cost of 1.13 euros per liter when it premired last year. That reflects an increase of about 60%.
Government Considers Measures
According to reports, the government has sounded the alarm over energy costs.
For transport fuels, the government is expected to follow its familiar approach by extending diesel subsidies and encouraging refineries to do the same in October. The €0.15-per-liter subsidy could therefore continue.
On electricity, the economic team has not yet revealed its plans, instead urging consumers to choose PPC’s cheaper fixed-rate tariff, priced at €0.115 per kilowatt-hour. However, initial discussions on subsidizing consumer electricity prices are under way.
For heating oil, officials are reportedly considering a subsidy through refineries, as well as reducing the special consumption tax to €0.210 per liter from €0.280 per liter. Scenarios for increasing the heating allowance paid to eligible households are also being discussed.
Decisions are expected toward the end of September, once the situation has been reassessed.
Source: OT
