KEPE: Greece has little means to defend itself against energy increases

The structural causes for the strong blow to the energy sector that has negative consequences for the Greek economy as a whole are examined by KEPE in its analysis entitled “The Two Aspects of the Energy Crisis in the Greek Economy: Part A”. As KEPE concludes, our country in terms of energy is more exposed compared to the recent past than the developments in the international markets. Therefore, it has little means to defend itself against the recent increases in oil and gas prices, as a result of which we have been led to an energy crisis unprecedented for modern Greek data. Once again, therefore, the distortions of the Greek productive model become apparent, which is completely dependent on the external sector. To avoid these distortions, coherent planning is needed to address policies with a sectoral and regional dimension (see, for example, Greek National Productivity Board, 2021).

Moreover, as KEPE notes, the main conclusions of its analysis are the following:

1. After mid-2021 there was a sharp rise in prices of energy products, such as gas and oil.

2. Currently, the percentage share of natural gas in the energy mix of the Greek electricity market exceeds 40%.

3. The structural analysis of the Greek economy, which is based on the latest available data and which correspond to the Input-Output Chart for the year 2015, showed that the two main sectors on which the energy sector for input markets depends are ” “Mining and quarrying” (while only with the “Basic metals production” sector the energy sector shows relatively high forward and at the same time relatively high backward interconnections).

4. Combining point (2) with (3), it follows that there has been a sharp structural change in the energy sector. In particular, the share of domestic mining, on which the Greek economy has traditionally relied for the production of cheap energy, has decreased significantly and has been largely replaced by gas imports.11 Thus, on the one hand, the structural change in the input mix for the country’s energy production at the expense of the mining sector, on which the Greek economy has traditionally relied, and in favor of imported gas, and, on the other hand, the spike in international gas and oil prices, have created an explosive increase in energy costs in the Greek economy.

5. Finally, it is worth noting that “energy” is an important component of the real hourly wage.

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