By Tasos Dasopoulos
With the increased possibility of a new rally in natural gas prices, which will increase electricity tariffs accordingly, the economic staff of the Government is trying to plan alternative scenarios for the support measures to be announced next month.
Sources of the Ministry of Finance stressed that the question is no longer if, but how much more the price of natural gas will increase when most of Europe will now be in a situation where there will be fuel rationing. Based on the good scenario, leaving Europe without any Russian gas has been discounted by the markets which raised the price of natural gas from 100 euros per thermal megawatt hour in May to 200 euros from mid-June until now. Therefore, there may be a technical reaction with a slightly higher price which will quickly decline to a price around 200 euros/megawatt hour.
The price reduction will be helped – based on this scenario – by the 15% energy saving that the EU has decided, but also by the assessment that Russia will limit but not completely stop the flow of natural gas to Europe.
The worst-case scenario is that the Nordic-specific austerity program fails due to weather conditions, causing consumption to skyrocket. The result will be that the EU will turn more towards the liquefied gas market. LNG will be much more expensive than pipelined and in short supply as the huge quantities that Europe will need are not available. Then we might see natural gas at 250 or even 300 euros per megawatt hour.
The Greek support measures
The financial staff has for now adopted the good scenario and based on this is trying to design a support package for the rest of the year. The main core of the new package will be support for reducing the price of electricity.
At first glance, it is certain that the 2 billion euros calculated for the absorption measure of the readjustment clause will not be enough. The measure was designed with the price of natural gas up to 120 euros per thermal megawatt hour and is now at 200, at a time when consumption is reduced due to summer holidays.
According to a first estimate, the implementation of the measure until the end of the year will require approximately another 1 billion euros by the end of the year and the same amount for the first half of 2023. If the bad scenario is implemented again, the bill will grow as long as the price of gas will be well above 200 euros.
The fuel pass 3 – accuracy check
The unstable factor of natural gas on the one hand and the drop in the prices of crude oil and gradually of gasoline below 2 euros per liter, puts the financial staff in second thoughts about the 3rd fuel subsidy (fuel pass 3) that it plans for October – December period.
The fact that only one in three prefers the subsidy via electronic card, while the other two accept to lose the extra 15 euros of the subsidy to be able to do with the money as they want, convinces the staff of the Ministry of Finance of one thing: That the big problem is no longer in fuel.
For this reason, they are thinking of continuing the diesel subsidy that mainly concerns professional drivers and giving a fuel subsidy a little lower, so that there are resources for the third main support measure: The second punctuality check (or whatever it is called) which will be higher than 200 euros, but also more targeted. By scaling, the most vulnerable will get more and the least vulnerable less.