Analyzing the Effects of Exogenous Price Adjustments in Energy Markets Using an Input-Output Model: The Case of Turkey

2018
Meral Özhan

Energy commodities play a key role in all economies not only because of their absolute volume but also because of their backward and forward linkages to other sectors of the economy. Accordingly, prices of all other sectors depend on price changes in the main energy goods. The I-O model provides an appropriate tool to analyze the results of these interactions both in the form of volume and price changes in all sectors of the economy. Total energy consumption in Turkey has increased from 74 Mtoe in 2002 to 131.3 Mtoe in 2015, growing at 4.1 percent annually. Nearly 90 percent of the total energy supply in Turkey is provided by the three primary energy sources: natural gas (30.7 %), coal (29 %), and petrol (28.1 %). The remaining 10 percent come from renewable energy sources, mainly from hydroelectric power stations. Moreover, in 2016, 99.5 percent of natural gas, 89 percent of petrol, 60 percent of lignite, and 97 percent of hard coal were imported (BOTAS, 2016). As a result, nearly 78 percent of the total energy supply is met by imports. Clearly, on the supply side the Turkish economy is heavily dependent on foreign resources. It is also expected that this energy problem will not change significantly in the foreseeable future (OME, 2014). This situation implies that Turkey has very limited bargaining power in the pricing process administered mainly by the suppliers operating in noncompetitive international market structures such as oligopolies, cartels, or a few dominant state-owned companies. Natural gas mainly comes from Russia, Iran, Azerbaijan, Algeria, and Nigeria. Petrol is imported mainly from Iraq, Iran, and Russia (BOTAS, 2017). Domestic prices paid by final consumers and manufacturing companies are set by another chain of oligopoly firms. The Energy Market Regulatory Board (EMRB, EPDK) sits at the top of the pyramid of the domestic distribution process and regulates the market. Using the standard I-O price model, this paper analyzes a one-time effect of an exogenous price increase in imported energy commodities on domestic production sectors. The study is based on the 64-sector 2012 I-O table published by TurkStat. It is used within the I-O modeling framework and two scenarios are designed for computations: a low inflation scenario and a high inflation scenario. In each scenario import data are grouped into three categories: crude petroleum and natural gas imports, imports of refined petroleum products, and all other imports.

Atslēgas vārdi
multisectoral modelling, applied models, macroeconomy, TurkStat, I-O modeling framework
DOI
10.7250/9789934221194.011
Hipersaite
https://ebooks.rtu.lv/catalog/ekonomika-un-vadibzinatne/494/

Özhan, M. Analyzing the Effects of Exogenous Price Adjustments in Energy Markets Using an Input-Output Model: The Case of Turkey. No: D.S.Meade, V.Ozoliņa, red. Applied Macroeconomic Multisectoral Modeling. Riga: RTU Press, 2018. 189.-207.lpp. ISBN 978-9934-22-118-7. e-ISBN 978-9934-22-119-4. Pieejams: doi:10.7250/9789934221194.011

Publikācijas valoda
English (en)