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Unveiling natural gas consumption sectoral price elasticities

Author

Listed:
  • Simone Emiliozzi

    (Bank of Italy)

  • Filippo Favero

    (Snam)

Abstract

This paper analyzes how natural gas consumption in Italy responded to supply-driven Title Transfer Facility (TTF) price shocks from 2012 to 2023. Leveraging a granular monthly dataset that captures sectoral and provincial gas consumption, and applying a panel local projections methodology, we find significant rigidity in short-run consumption, constrained by contractual and technological factors. In the medium term, gas consumption declines by 13% two years after a price doubling caused by supply disruptions. Sectoral differences are pronounced: gas-intensive industries, such as chemicals and metallurgy, exhibit lower elasticity due to limited substitutability, while electricity generation and non-gas-intensive sectors show greater responsiveness. The 2021-2022 European energy crisis amplified these effects, further increasing sectoral sensitivity to price changes. These findings highlight the importance of temporary targeted policy measures to mitigate the adverse effects of gas supply disruptions.

Suggested Citation

  • Simone Emiliozzi & Filippo Favero, 2025. "Unveiling natural gas consumption sectoral price elasticities," Questioni di Economia e Finanza (Occasional Papers) 941, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_941_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0941/QEF_941_25.pdf
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    More about this item

    Keywords

    natural gas; panel local projections; narrative identification; 2021-2022 European energy crisis; dynamic elasticity;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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