A Supply and Use Model for Estimating the Contribution of Costs to Energy Prices

This paper develops a supply and uses a model to estimate the direct and indirect contribution of costs to the formation of energy prices. The model is implemented into the Greek economy based on data from the supply and use tables. The findings of the analysis indicate that the main component of energy prices are profits, mainly distributed to the energy sector itself, and imports, which mostly concern Mining and quarrying products and Coke and refined petroleum products imported from non-EU countries. As far as the contribution of the energy sector to the price formation of the other industries of the Greek economy is concerned, it is found that the energy sector mainly contributes to the price formation of industrial sectors. The results imply that the containment of energy prices should be principally based on an income policy that would limit excessive profits within the energy sector and an import substitution policy towards the exploitation of domestic mining and quarrying products as well as coke and refined petroleum products.

Automated summary

This study develops a supply and use model to estimate the contribution of costs to energy prices. The findings reveal that profits and imports are the main components of energy prices. The energy sector mainly influences the price formation of industrial sectors in the Greek economy. The results suggest that controlling energy prices should involve income policies to limit excessive profits and import substitution policies.