Political and economic aspects of energy prices and their regional context in the Slovak Republic after joining the European Union

Martin Plešivèák and Martin Maèanga

ERSA conference papers from European Regional Science Association

Abstract: The issue of energy prices presents an extremely topical theme with a major impact on human society. Energy demand is constantly increasing and most regions of the world are facing serious difficulties in ensuring sufficient energy supplies. However, not only global events affect energy prices in the particular country. National energy markets are highly specific and some local factors may also prove as significant. In our contribution we focus on the Slovak Republic and try to analyze the major political and economic factors affecting the final price of energy, particularly of gas, electricity, heat and water. Political environment in Slovakia is characterized by frequent changes of governments with different ideological orientations manifested by different pricing policy. We pay attention mainly to the period after country's accession to the European Union, since this moment is associated with a wide range of major changes. Largely monopolized energy market has been gradually opening up to competition and the countries with regulated prices have been facing the increasing pressure to let the free market decide. Progressive liberalization of energy markets enables consumers to use the energy services offered by various private companies. This new element operating in the energy sector is largely reflected in final energy prices. Furthermore, this process is not still finished. Pricing policy is highly sensitive issue as it affects both the domestic and industrial consumers. In many EU countries, the state retains control over the prices of both the electricity and gas for final consumers. In most cases, it means result of efforts to shield the households and industry from violent fluctuations in prices. However, it shows as extremely difficult, since a fight against climate change becomes a political priority for the EU at the same time. It also includes efforts to minimize the using of fossil fuels and to achieve a transition to renewable energy, although this alternative is frequently associated with higher cost of production. Thus, the main goal of this study is to highlight the price disparities between different energy commodities and to explain the spatial differentiation within particular regions of Slovakia, since we are currently witnesses of significant regional disparities in energy prices. The explanation of these territorial particularities might be helpful for the entire spectrum of state and local institutions in the creation of the most suitable pricing strategy. Keywords: energy prices, market liberalization, pricing policy, regional disparities N74 - Europe: 1913–

Date: 2012-10
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