Tuesday, 4 June 2013

A look at energy prices for EU manufacturing under a Greek lens

The talk of the town in Greece lately is how high energy costs for the Greek manufacturing sector are prohibitively high. As the main cause of that the hike in the special consumption tax for natural gas is cited. Hereby I would like to look into what energy costs for manufacturing sectors of other EU countries are.

Eurostat provides data regarding the cost of natural gas and the cost of electricity. Data are divided into six consumption classes and out of those, in the charts to follow, I will include data for the second and fifth class (i.e. second lowest and second highest respectively).

First I would like to look at natural gas costs.

source: Eurostat, own calculations

Net of taxes, Greece has the 3rd higher natural gas price among the EU countries for which data were available (the above refers to the 2nd consumption class).

What I consider as being particularly interesting is what proportion of price taxes correspond to.

source: Eurostat, own calcualtions

Greece sits bang in the middle of the relevant table for the 2nd consumption class which is particularly relevant for most SMEs. Let's bear in mind that SMEs account for the lion share of the Greek corporate universe.

Let us look at data for the 5th consumption class now, which probably concerns more energy intensive firms and activities.

source: Eurostat, own calculations

Greece sits in the 4th place of that particular table and if one cares to look at net prices, in the 2nd place.

source: Eurostat, own calcualtions

What is remarkable is that for that particular consumption class, taxes account for a bit more than 10% of the gross price.

Now let us cast a furtive glance towards electricity prices.

source: Eurostat, own calculations
In the 2nd consumption class, gross prices - wise, Greece is again sitting bang in the middle of the table.

source: Eurostat, own calculations

According to the chunk of the gross price that taxes account for, Greece is placed in the 1st half of the table.

source: Eurostat, own calculations

Coming to the consumption class that energy intensive businesses fall into, electricity prices charged in Greece are the 5th cheapest among the EU countries (for which data were available).

source: Eurostat, own calculations

In this case as well, taxes account for about 30% of gross price charged, placing Greece in the 1st half of the relevant table.

To wrap this up, what the plethora of charts presented above tell us, is that as far as natural gas is concerned, taxes are not the reason that prices charged are that high. What they tell us instead is that net prices themselves are too high. Of course, the tax hikes didn’t help at all, especially in the current hellish juncture that Greece finds itself into. On the other hand, electricity prices, especially for energy intensive businesses, are on the low side, while taxes are higher compared to natural gas but again not outlandish when compared to our EU peers. What has to be taken into account is that the value added of Greek manufacturing is low and that even relatively lower or average energy prices can have a more adverse impact on manufacturers because of that fact.

1 comment:

  1. This comment has been removed by a blog administrator.