The effect of increased gas prices on European capitals and where Budapest stands in comparison
January 09. 2023. – 04:04 PM
The impact of the escalating energy crisis alongside the war between Russia and Ukraine on the countries of Europe is becoming increasingly clear. By the first half of 2022, residential gas prices have doubled in many countries, but the average increase at EU level has also reached 30 percent.
In some European capitals, households are paying more than two-and-a-half times more for gas than before, while many are trying to cut back on consumption as prices continue to soar. The statistics also reveal which countries are most exposed to the negative effects of the energy crisis and where the population is struggling to pay for heating and housing.
Gas wasn't cheap in Vienna to begin with, but then it went up
Tallinn is the European champion when it comes to price increases: according to data from September-November 2022, the Estonian capital has seen the highest average residential gas price increase in Europe compared to the year before. This represents a 268% increase compared to the same period last year, according to the Household Energy Price Index. At that time, gas cost Tallinn households €0.058/kWh, which rose to €0.21/kWh by autumn 2022.
In Vienna, Prague, Berlin and Lisbon, gas prices have also risen sharply in one year. The Household Energy Price Index (HEPI) compares energy prices in 33 European capitals, taking into account country-specific tariffs, the number of households and average consumption.
Between the first half of 2021 and the first half of 2022, Estonia has seen the biggest increase in residential gas prices in Europe. This represents an increase of 158 percent, with Northern Macedonia following close behind with its 148 percent increase. Energy prices practically doubled in a year in Belgium, Bulgaria, Luxembourg, Lithuania and Greece, but Sweden and Denmark, for example, have also seen increases of around 80 percent. Prices in Hungary and Turkey, on the other hand, fell by 5 percent and 10 percent respectively.
However, Tallinn is not the place where people are paying the most for gas. In this comparison, Amsterdam is in the lead, ahead of Copenhagen, Vienna and Rome. Between September – November 2021, gas cost €0.14 per kWh in Amsterdam, but in the same period of 2022, Amsterdam residents paid €0.38 for the same amount. This is also a significant increase of 169 percent. According to these figures, not only did households in Vienna suffer one of the highest increases (184 per cent), but the Austrian capital also paid the third highest price for gas in Europe (€0.3/kWh) – based on numbers from November 2022.
There were only two European capitals where the average price of residential natural gas fell within the aforementioned period: Bucharest and Budapest. This is deceptive, of course, because the 12 percent drop recorded in the Hungarian capital is mainly due to the weakening of the forint. The average price in September-November 2021 was €0.029/kWh (HUF 10.4/kWh at the then applicable exchange rate), which has fallen to €0.025/kWh by the same period of 2022.
Among the European capitals, gas was by far the cheapest in Budapest.
This was already the case in 2021, long before the outbreak of the war in Ukraine, which is not surprising in light of the utility cost price caps. The question is whether this will remain the same with the new regulations, as there will be households that will have to pay market prices for gas. However, this will only be reflected in the December-January data for the first time.
Another place where natural gas was similarly cheap was Belgrade, and in the Serbian capital the price increase was only 8%. In the Romanian capital, the average price of natural gas fell by 10 percent, but residents are still paying more than in Belgrade, Zagreb or Bratislava.
In Stockholm, however, households still paid roughly the same price for gas at the end of November 2022 as at the same time the year before, at €023/kWh (around 93 forints at current exchange rates), which is the fifth highest average price among European capitals. People in Stockholm were already paying a lot for gas, and the national average price has since gone up.
From a Hungarian point of view, the most important lesson to be drawn from these figures is that wealthier and more market-friendly Western countries are more willing to let their populations bear the brunt of the brutal energy price rises seen in recent times. Thus, even though they started from a higher price to begin with, energy costs still increased more in these countries than elsewhere.
All of Europe is trying to save
The rising cost of natural gas has made it vital to know how to save money. In many places, heating has been turned down in public buildings and the use of hot water has been limited. According to various data compilations, gas consumption in Europe is steadily decreasing. Numbers from the end of November 2022 show that out of all European countries, Finland has by far saved the most, with a 52% reduction in gas consumption compared to the average for the period between 2019-2021. Admittedly, the Finns have a negligible residential gas consumption. After the Finns come the Latvians with a 30.4 percent drop in consumption and the Lithuanians with a 27 percent drop.
Hungary consumed 10% less gas than the average for previous years, which puts us ahead of ten countries among the 25 European countries listed in the comparison.
And there was a lot to save, as according to Eurostat, Hungary was in the lead in terms of annual gas consumption per capita for heating (3019 kWh) in 2021. Out of the 27 EU countries, only the Netherlands (3155 kWh) used more than we did. The EU average is 1515 kWh.
The summary of G7 also shows that gas consumption in Hungary is on the decline. Months later than the European average, but around the time the utility price caps were removed, Hungary finally started to adapt to the new energy market situation: in the last three months of 2022, after the heating season started, the country saved more than 600 million cubic meters of gas. Based on historical trends, the reduction is not related to the weather, with an average of 7 million cubic meters less gas consumed per day than expected in the autumn of 2022. This brings the total savings to 600 million cubic meters, which is not only thanks to the residential sector, but also includes industrial consumption, which has also decreased.
At the same time, the situation in Hungary would be even worse in terms of energy savings if there had not been a partial increase in utility charges at the end of the summer. This is confirmed by the fact that there were months before the change in the utility costs when the country' consumption actually increased.
Of the top European gas consumers, the Netherlands cut its gas consumption by almost 24%, Luxembourg by 21%, Belgium by 16.2% and Germany by 14.5%. Slovakia was the only country to see an increase, consuming 5 percent more gas than it did before.
Many are struggling to pay for heating
There are a few key indicators that show which countries had part of the population already struggling to finance housing costs – rent, mortgage, home loans – prior to the energy crisis.
8.3 percent of the EU population spends more than 40 percent of their income on housing (rent, mortgage repayments) and 6.9 percent claim they cannot heat their homes properly. The latter problem mainly affects elderly people living alone and single parents.
Understandably, many European countries are trying to alleviate the effects of the energy crisis through extraordinary utility subsidies. In Vienna, as mentioned earlier, local residents can receive a one-off subsidy of €200. There are similar examples in Hungary, where the municipality of the capital is providing an increased utility allowance to families in need, but employees of the local government are also receiving extra money for this purpose. There are also examples of companies giving utility allowances: for example, the Hungarian subsidiary of Rossmann has earmarked a quarter billion forints for this purpose.
According to Eurostat's data for 2021, Greece had the highest proportion of people spending more than 40% of their income on housing. One might think that this phenomenon only affects poorer countries, but due to high real estate prices and an increase in rent, many people (10-15%) in the UK, Germany, Switzerland and Denmark have found themselves in a similar situation. In Hungary, this was the case for 2.5 percent of the population, while in neighboring countries the proportion was typically higher: for example, in Austria it was 6.1 percent, in Romania 7.5 percent and in Slovakia 3.2 percent.
2.5 percent may not seem like a lot, but housing and energy poverty continues to affect many people in Hungary nevertheless.
Of all European countries, Albania has the worst heating situation. 35.8 percent of the Albanian population cannot afford to heat their homes properly: more than half of the elderly and 42 percent of single parents are facing this problem. In Bulgaria, Northern Macedonia, Lithuania and Turkey, the rate was also above 20 percent at the time of the survey.
In Hungary, 5.4% of the population have problems paying for heating. 9.1 percent of the elderly living alone and 6.9 percent of single parents were in this situation, according to statistics from 2021. Meanwhile, in Switzerland, the problem is practically non-existent, with only 0.2 percent of the population struggling to pay the heating bill, but Norway, Iceland, Sweden, Austria and Finland are doing similarly well in this regard.
For more quick, accurate, and impartial news from and about Hungary, subscribe to the Telex English newsletter!
This article was written as part of the European Cities Investigative Journalism Accelerator project in collaboration with the Berlin-based Tagesspiegel. It is a series of media reports on the challenges facing European countries and cities. The project is funded by the Stars4Media programme.