The Impact of Fossil Fuel Market Fluctuations on the Japanese Electricity Market During the COVID-19 Era

Kentaka Aruga, Md. Monirul Islam and Arifa Jannat
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Md. Monirul Islam: Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh
Arifa Jannat: Institute of Agribusiness and Development Studies, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Commodities, 2025, vol. 4, issue 2, 1-15

Abstract: The COVID-19 pandemic and the Russia–Ukraine war have struck the world’s energy markets. This study analyzed how the recent unstable fossil fuel markets impacted the Japanese electricity contracts, classified as extra-high-, high-, and low-voltage contracts. Multiple structural break tests were conducted to endogenously determine breaks affecting electricity prices during January 2019 to November 2022. By incorporating the effects of these breaks in the autoregressive distributed lag (ARDL) model, the study analyzed the effects of natural gas, coal, and crude oil prices on the types of electricity contract prices. The results of the analyses indicated a surge in electricity prices for low- and high-voltage contracts driven by an increase in natural gas. The results imply the importance of providing proper financial support to mitigate the effects of soaring electricity prices and implementing policies to diversify the electricity generation mix in Japan.

Keywords: electricity price; liquefied natural gas; coal; crude oil; COVID-19; Russia—Ukraine war; ARDL model (search for similar items in EconPapers)
JEL-codes: C0 C1 C2 C3 C4 C5 C6 C7 C8 C9 D4 E3 E6 F0 F1 F3 F4 F5 F6 G1 O1 O5 Q1 Q2 Q4 (search for similar items in EconPapers)
Date: 2025
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