Transformations  in
Business & Economics

IMPACT OF OIL AND NATURAL GAS PRICES ON THE ECONOMY AND CONSUMERS IN LITHUANIA
Remigijus Ciegis, Reda Pileckaite, Rasa Pusinaite

ABSTRACT. The aim of this article is to evaluate the impact of oil and natural gas prices on Lithuania's real GDP variation and household purchasing power. The mechanisms of variations of energy costs influencing economy are analysed in the article. Also the influence of changes in energy price on household disposable income and product demand is discussed. The paper also presents the methodology of analysis of influence of oil and natural gas prices on Lithuania's economy and consumers, and provides the analysis of indicators related to changes in oil and natural gas price. The influence of natural gas price on heating prices in Lithuania and the influence of oil prices on the fuel retail prices, as well as the impact of oil and natural gas price changes on Lithuania's real GDP is assessed in this article. Theoretical analysis has shown that there are three main ways through which macroeconomics is influenced within sudden energy price shocks - supply, demand and monetary policy. This study clearly shows that changes both in oil and natural gas price have a statistically significant impact on Lithuania's real GDP, especially on consumer purchasing power through the decline of income allocated to spend on other goods and services.

KEYWORDS: oil, gas, price, economy, consumers, Lithuania.

JEL classification: Q40, Q31, Q32, P28.