Caspian Report - Issue: 08 - Fall 2014

MUBARIZ HASANOV
46
Figure 1. Primary energy Consumption in the EU Countries 1965-2012, Mtoe 2 Source: BP (2013)
monopolistic. Therefore, increasing
competition and fostering inter-regional
trade were considered as key
to ensuring efficiency in energy markets.
Primary energy commodities
such as oil and coal as well as refined
fuels such as gasoline, diesel and fuel
oil are easily traded on international
markets. As a result, the prices of
these commodities are determined
in international markets, and enduser
prices (excluding taxes) of refined
fuels have converged across
countries. On the other hand, natural
gas (except for LNG) and electricity
trade among countries are bounded
by capacity of transmission. Therefore,
there have usually been large
discrepancies in gas and electricity
prices across countries.
In this paper we focus on energy
prices in the EU countries. In the next
section we present a brief overview
of energy demand trends in the EU. In
Section 3 we discuss energy prices in
EU countries, with Section 4 providing
a conclusion.
2. ENERGY CONSUMPTION
TRENDS IN THE EU COUNTRIES
The total primary energy consumption
of the EU countries is depicted in
Figure 1 below. As can be seen from
the figure, the energy consumption
of the EU countries rose significantly
between 1965 and 1979. Average
compounded growth rate of energy
consumption was around 3.6% per
annum. Following a drastic fall during
the 1979-1982 period, energy
Energy Mix in 1991 Energy Mix in 2010
Figure 2. EU Energy Mix. Source: EUROSTAT
2.
Energy consumption excludes Estonia, Latvia and Lithuania prior to 1985 and Slovenia prior to 1991.