The liberalization of the Romanian natural gas market, which officially began on 1 July 2020, marked a turning point for consumers, suppliers, and authorities. The primary goal of liberalization was to create a competitive market with prices determined by supply and demand, aligning with European practices. However, the effects on prices have been complex and sometimes contradictory.
The Context of Liberalization
Until 2020, gas prices for household consumers were regulated by the state. Liberalization involved removing this control, allowing suppliers to set market-based prices. The expectation was that increased competition would lead to lower prices and better deals for consumers.
Price Developments: Between Theory and Reality
In the initial post-liberalization phase of 2020–2021, prices were relatively stable, with some offers even lower than the regulated rates. However, from 2021 onward, amid the European energy crisis and rising international prices, tariffs surged rapidly. In 2022, against the backdrop of the conflict in Ukraine and reduced gas flows from Russia, Romania recorded the highest gas prices in decades.
Factors Influencing Prices
- International market volatility
- Limited storage and interconnection capacity
- Lack of consumer education on switching suppliers
- Delayed government interventions, such as price caps and offsets
Regulatory Interventions – A Step Backward?
Although liberalization implies a free competitive environment, the government intervened with support schemes and price caps in response to massive price hikes. These measures provided temporary stability but were criticized for distorting the market and undermining incentives for efficiency.
Conclusion
The liberalization of the gas market was a necessary step for European integration but came with significant challenges. Price developments were influenced not only by domestic market mechanisms but also by the international context and government policies. Moving forward, balancing consumer protection with the efficient functioning of the market will remain a delicate issue.