Hungary paid almost four times more for Russian gas imports in 2022 as in 2021. According to Eurostat data, the bill in 2022 was EUR 7.353 billion in the first 11 months. In 2021, the government paid only the quarter of that, EUR 2.189 billion. The question is how gas prices will change in May.
Some experts say that countries that have fixed gas prices for both households and enterprises instead of cutting prices are better off.
Between January and May, imports ranged between 245 million and 424 million m³. The peak was in June with 751 million m³, followed by imports of 522-576 million m³ between August and November.
In the following months, in September, October and November, the monthly bill exceeded one billion euros. The government paid the most in October when the amount was EUR 1.3 billion.
“The government does not deliberately pour money into financing Russia’s war in Ukraine,”
– energy experts interviewed by 24.hu told the news portal.
Many businesses also bought gas at the August peak, as analysts predicted further price rises. But across Europe, demand spiked during this period. The panic filling of gas storages has given rise to concerns that there will not be enough gas in Europe.
Gas industry experts define the market price as the price on the Dutch stock exchange, the benchmark in Europe. This is also the price to which the Russian Hungarian gas contract prices are linked. If prices fall, then with some delay Russian imports should also be cheaper.
Whatever the price on the stock exchange, Prime Minister Viktor Orbán does not want to change the household tariffs. At his end-of-year press conference, he made it clear that he would not change either the reduced tariff of HUF 102 (EUR 0.26) or the HUF 767 (EUR 1.93) tariff.
In 2021, the price per m3 was HUF 74 (EUR 0.19), in 2022 it was HUF 205.6 (EUR 0.53) and in October 2022 it was over HUF 1,300 (EUR 3.33). As we have already written about, the spas in the capital have it worst, with an eighteen-fold increase in gas prices.
Many entrepreneurs cannot afford the thirteen-fold increase in gas prices. The unilateral contract modification does not result in the cancellation of the contract with MVM Next. The company has offered to allow contractors to cancel their contracts if they are dissatisfied with the price. Since suppliers charge at roughly the same level, entrepreneurs either pay or shut down their businesses.
According to Eurostat data, the average purchase price in the first 11 of 2022 was HUF 572 (EUR 1.46) per m3. This amount is very far from both the reduced household prices and the multipled market prices offered to entrepreneurs.
Gas is not sold at a price of HUF 102 (EUR 0.26) per m3 charged to households. Therefore, each m3 of household gas has a deficit of HUF 470 (EUR 1.20).
The KSH estimates household gas consumption at 3.9 billion m³. If all of this were used at a reduced price, the reduction would generate a loss of HUF 1,833 billion (EUR 4,687,384,038). If the gas consumption of enterprises is similarly calculated at the market price of HUF 1,300 (EUR 3.33), the gas supplier would gain HUF 728 (EUR 1.86) per m³ compared to last year’s average purchase price.
The question is how the next storage period will develop, i.e. how expensive it will be to buy gas from May. Another question is how households and enterprises will feel about market changes.
“At the moment, the government’s energy policy does not reflect the market price and thus artificially drives up inflation,”
– said an investor of an energy company. The loss of the rationing is being cross-financed through energy tariffs charged to businesses. Meanwhile, the money is being collected back from the public, paying for the extra profit tax on expensive products that the government has created to finance the rent control fund.
I wonder if it’s worth theorizing that Orban did not pay the amounts that are public (as per Eurostat data), but possibly paid a secret lower price, and the rest just went “elsewhere” in the deal with Putin.
…Or was it just a case of panic buying, regardless of the price?