ECONOMY

With energy prices sky-high, consumers must fork out or cut back

With energy prices sky-high, consumers must fork out or cut back

It is a nightmare prospect, but a real one: households having to pay 5-6 billion euros to buy heating oil and natural gas for the winter.

Last year, heating oil was selling for €1.16 per liter. This year, the start of the winter season, in October, oil will cost €1.70 per liter. Things are worse with natural gas: last October, it cost €6 per kilowatt-hour and, this year, its price has shot up to €24 per kWh and could rise higher. If these prices persist, and, for the moment, forecasts are really pessimistic, households will soon grapple with the dilemma of either drastically reducing consumption or dramatically increasing expenditure.

The Ministry of Finance is still considering raising the heating subsidy. But with the soaring cost of subsidizing electricity, the margin for significant state support is severely restricted.

As far as natural gas is concerned, household consumption accounts for over a quarter of Greece’s total: in the first half of 2022, of the nearly 30 terawatt-hours consumed, 8.2 Twh were used by households. So, on an annual basis, households consume about Twh of natural gas, or 16 billion kilowatt-hours. 

In January 2021, a kWh of natural gas cost 1.6 cents (€0.016) in the Amsterdam futures market. In October 2021, with the rally already under way, it cost 6.38 cents. This August, the price has gone up to 17 cents and people dread what the September price will be. 

Even taking account of the discounts through the Energy Transition Fund, end-consumers could be called upon to pay over 25 cents per kWh of natural gas. If prices do not climb down in the immediate future – not a likely prospect – a search for substitutes will be under way.

With the households using natural gas expected, at a minimum, to pay €4 billion for heating, those using heating oil are expected to fork out €2 billion, if international prices do not change.

As for those dependent on electricity for their heating, there is at least the generous state subsidy, which is not limited to a consumption of 300 kWh per month, as was the case. Thus, these households will pay less per kWh than last year, despite the explosive rise in the price of electricity.

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