Gas prices could rise in 2025, requiring a backup scenario

Could this affect imports, the economy and Albanian families?

We think so and here’s why!

In these early days of 2025, the increase in the price of gas for consumption is being announced for the economy and families in mainly European countries that depend on gas supplies from other exporting countries. Although this expected increase in price does not have the potential to significantly affect imports and the Albanian economy, we have tried to analyze the effects in several key aspects.

Albania has low use of gas as an energy source and in general consumption. The direct impact of the increase in gas prices on the domestic economy may be limited. However, there are several indirect channels that could affect the Albanian economy, especially through trade relations and inflation from trading partner countries.

Albania is partially dependent on imports for energy. The increase in gas prices would translate into higher costs for electricity production in some of the countries listed on the energy exchange where electricity is purchased by Albanian public and private companies.

With higher gas prices on international markets, Albania could face a higher financial burden for energy imports. Since imports will become more expensive, this could weigh on the country’s trade balance.

The increase in gas prices in this regard could affect the prices of products and services on international markets, also affecting the cost of Albanian imports, especially for goods related to industrial production and transportation.

Although gas use within Albania is minimal, some industrial sectors that import raw materials or finished products from gas-dependent countries (such as Turkey, Italy or other EU countries) could face higher import prices.

Often, the increase in gas prices also affects the price of oil. Given that Albania relies heavily on oil for energy and transportation, this would have a greater impact on domestic inflation and the purchasing power of citizens.

The increase in gas prices could thus affect the transport sector, especially for those companies that use gas as fuel. This could increase logistics costs for businesses and consumers. Although the use of gas in transport is limited in Albania, global logistics costs could increase due to the increase in fuel prices. This could affect the prices of imported goods.

Heavy industry and sectors that rely on gas for production (e.g., metal processing, construction materials, trade and services) could face increased costs, affecting their competitiveness.

Rising energy prices in the region could affect the purchasing power of tourists from neighboring countries. If their transport and energy costs increase, it could negatively affect the number and budgets of visitors to Albania.

So, the negative scenario that may occur is that the increase in gas prices will be reflected in production and transportation costs, affecting the increase in prices of products and services for consumers.

Consumers may feel pressured by the increase in heating prices, gas for vehicles and the increase in prices of basic products, negatively affecting domestic demand.

If the government decides to subsidize the price of gas to ease the burden on consumers, this may affect the increase in public debt.

Although the increase in gas prices in 2025 has a partial impact on the economy, this impact creates increased pressures on key sectors and consumers.

In order to cope with the possible impacts of the increase in gas prices and the indirect consequences on the Albanian economy, short-term measures (in addition to long-term ones) should be analyzed as necessary to address the challenges in the market, also considering other impacts based on dependence on imports.

In an analysis of a backup scenario (plan) that institutions and private businesses that may be most affected should consider, we will express some moments where there may be room for advance planning.

The first is to consider a plan regarding subsidies for basic goods, if the increase in import prices affects the prices of food or basic products and they will start to increase. The government can offer subsidies to protect low-income families.

The second is the program for controls on the profit margin in businesses that are thought to be more likely to speculate due to the presence of higher informality. Monitoring and limiting the profit margin for basic products to avoid price abuses is a daily task of institutions and cooperation with business and not a requirement of the moment.

Third, we need to review once again the performance and the issues to be addressed related to investments in renewable energy, improving the energy network at a faster pace, but also to energy efficiency in homes. Promoting solar and wind energy projects to reduce dependence on energy imports and the impacts of global crises, as well as promoting the saving of energy resources through efficiency projects are needs related to everyday life, not just a momentary demand related to market pressure from rising gas prices.

Fourth, we need to review once again how well the legal obligations for strategic energy reserves have been implemented. Creating or expanding energy reserves to cope with unforeseen situations is a need of the day and not of the moment.

Fifth, in these cases, it is necessary to start planning within the state budget contingency fund a scenario for support for affected businesses and subsidies for strategic sectors. Support for industrial sectors that depend on imports of raw materials, to reduce the impact of rising costs, is something related to the sustainability of the economy.

Sixth, we believe that within the framework of the analysis of fiscal relief regimes, it is necessary to review the price of energy not only for electricity for the population, but as a need for all categories of consumers that may be affected. Offering temporary tax reductions for businesses most affected by price increases is an option that is needed if the moment of inflation appears [again influenced by the increase in gas prices.

So, if we can talk in this case about preventing the deepening of possible effects, we think that there is nothing to be done, if we start with forecasting and preparing for short-term and long-term scenarios.

Drafting a national plan to address the impacts of sudden price increases in international markets would in this case be the most acceptable initiative by businesses and citizens.

Për të përballuar sfidat e mundshme nga rritja e çmimit të gazit dhe pasojat indirekte, është e rëndësishme të kombinohen politika afatshkurtra që ofrojnë lehtësime të menjëhershme me strategji afatgjata për të ndërtuar një ekonomi më të qëndrueshme dhe të pavarur. Planifikimi i hershëm dhe menaxhimi i integruar janë kyç për të shmangur përkeqësimin e situatës.

Megjithëse përdorimi i gazit në Shqipëri është minimal, efektet indirekte përmes inflacionit global, kostove të importeve dhe ndikimeve në transport mund të ndikojnë ekonominë tonë dhe buxhetet e institucioneve publike dhe ato familjare.

Situata e ardhshme mund të jetë një mundësi për të shqyrtuar zhvillimin e sektorëve të rinj energjetikë ose për të përfituar nga pozicioni gjeostrategjik i vendit.

Përballimi i kësaj situate kërkon efektivitet në përshpejtimin e diversifikimit të burimeve të energjisë dhe menaxhimin e inflacionit nga energjia.