Unveiling natural gas consumption sectoral price elasticities

Simone Emiliozzi () and Filippo Favero ()
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Simone Emiliozzi: Bank of Italy
Filippo Favero: Snam

No 941, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

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.

Keywords: natural gas; panel local projections; narrative identification; 2021-2022 European energy crisis; dynamic elasticity (search for similar items in EconPapers)
JEL-codes: C33 E32 L95 Q41 Q43 (search for similar items in EconPapers)
Date: 2025-06
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