The Assessment of Natural Gas Pricing

Vilda Giziene, Lina Zalgiryte

Abstract


Purpose. The purpose of this paper is to analyze pricing structure ant to identify factors with the most affect on natural gas price. Methodology. To achieve this the tasks formulated are: to analyze the changes in the price of natural gas in the EU; to investigate the gas pricing structure; to determine what affects household and organization costs for natural gas; to compare the EU's competitiveness with other countries in relation to the price of natural gas; to analyze the potential energy reduction and control measures. EU and domestic price statistics provide important information for monitoring the country's energy market. They are used to measure the rises and falls in gas prices and the effect this has on household and organization costs for natural gas, including effects on prices from any changes in competition within the market. The analysis of Lithuanian and foreign scientific literature, analysis of statistical data, and analysis of legislation are used. Results. A comparative and causality analysis of EU and other countries allowed to identify pricing issues, factors having most effect on the price and on household and organization costs, and regulatory issues. The theoretical contribution. Prices of natural gas is a huge political and economic problem. This creates not only additional costs to households and industries but also affects the corporate global competitiveness. For the period of 2008-2012 energy prices in Europe increased significantly, while wholesale gas prices have remained stable. Prices across the EU also changed significantly – in some countries users pay 2.5-4 times more than in others. In order to ensure that Europe is going to deal with changes in the energy market, it is necessary to ensure that consumers receive a sustainable and affordable energy and industry is able to maintain its competitiveness. Klaipeda LNG FSRU started operating on 3 December 2014 but it's influence in the reduction of gas prices was felt by the users before the terminal started operating. Thus it is important to measure the short-term affect of this terminal not only at domestic but also EU level. Practical implications. This analysis could be taken as a foundation to further analysis of the long-term gas price forecasting, evaluating the factors with the most affect on natural gas price and long-term affect of Klaipeda LNG FSRU.

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