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The predicaments of the Turkish natural gas market between supply shortages and price hikes

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  • Dastan, Seyit Ali

Abstract

In early 2022, the Turkish natural gas market faced two challenges of price hikes and supply disruptions together. Turkey's simultaneous exposure to both the price increases and supply disruptions urges the policymakers to assess the predicaments of the gas market in terms of competition and security of supply. Based on a wider perspective on the root causes of these issues by examining a two-decade period, this paper investigates if the issues are a result of momentary pressures on the gas market or if there are any substantial reasons in the background. This mentioned period overlaps with the liberalization of the Turkish gas market, so it also hints at the achievement and failures of the reform goals. As the research documents the basic figures of prices and supply security indicators, we get to the conclusion that the problems encountered in 2022 are not a result of spontaneous developments but intrinsic to the overall dynamics of the Turkish gas market. The paper demonstrates that competition is not achieved in the import and retail sales levels; gas prices have almost quadrupled in real terms between January 2004 to April 2022, excluding the impact of inflation; and security of supply index is below the medium level of safety when the IEA index is applied. Overall, we found a mutual causality in the failure of achieving competition and security of supply in natural gas markets while the trend in gas prices is mostly related to the variables of oil price, local currency, and network charges.

Suggested Citation

  • Dastan, Seyit Ali, 2023. "The predicaments of the Turkish natural gas market between supply shortages and price hikes," Resources Policy, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:jrpoli:v:82:y:2023:i:c:s0301420723002775
    DOI: 10.1016/j.resourpol.2023.103566
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    References listed on IDEAS

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    1. Dastan, Seyit Ali, 2011. "Analysing success of regulatory policy transfers: Evidence from Turkish energy markets," Energy Policy, Elsevier, vol. 39(12), pages 8116-8124.
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    6. Dastan, Seyit Ali, 2018. "Negotiation of a cross-border natural gas pipeline: An analytical contribution to the discussions on Turkish Stream," Energy Policy, Elsevier, vol. 120(C), pages 749-760.
    7. Simon Schulte and Florian Weiser, 2019. "Natural Gas Transits and Market Power: The Case of Turkey," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
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    1. Hu, Guoheng & Liu, Shan & Wu, Guo & Hu, Peng & Li, Ruiqi & Chen, Liujie, 2023. "Economic policy uncertainty, geopolitical risks, and the heterogeneity of commodity price fluctuations in China ——an empirical study based on TVP-SV-VAR model," Resources Policy, Elsevier, vol. 85(PA).

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