The country doesn't make much oil and gas at home, its nuclear fleet isn't functional, and it still gets most of its energy from fossil fuels. That dependence is important in many fields, not simply energy.

It has an impact on Italy's trade balance, inflation, and how much money families can spend. As per Italy Import Data by Import Globals, it also makes the country less competitive in business and makes it easier for prices to rise around the world or for supply lines to get tighter.

This article speaks about why Italy buys so much electricity from other nations, what that means for trade risks, and what changes to policy and infrastructure can help lower those risks.

1) Why Italy Needs to Buy things from other Countries to Make Things

Italy's geography and resources only let it manufacture a little amount of fossil fuels compared to what it utilizes. As per Italy Export Data by Import Globals, Italy's economy still needs a lot of energy for things like creating things, moving things, heating homes, and providing services. This is why Italy has a long-term deficit between what it makes and what it requires. Imports fill this gap.

This is also because of how Italy gets its power. Fossil fuels, oil, and natural gas are still the main sources of energy. Italy's economy relies heavily on natural gas because it is needed to heat homes, run businesses, and create electricity. If an economy has a lot of gas but doesn't make much of it, depending on imported gas (pipelines and LNG) might be a huge concern.

2) Oil: The Most Crucial thing we Buy to Get Energy

As per Italy Import Export Trade Data by Import Globals, Italy still utilizes a lot of oil, mostly for transportation and the petrochemical industry. One crucial thing to realize is that Italy gets most of its crude oil from other countries. Most of the crude oil that refineries utilize comes from other nations, even if they are in the country. This indicates that the country's oil exposure is largely to oil that it buys from other countries.

According to Italy Import Custom Data by Import Globals, Italy's weakness in this area isn't just "where oil comes from," but also the fact that oil prices are set on foreign markets. If prices go up, Italy's trade imbalance could get worse because it costs more to buy the same amount of oil.

3) Natural Gas: Safety of Supply, Variety, and Access to Infrastructure

Natural gas is often the fuel that determines Italy's short-term energy security. It also needs a lot of different suppliers and solid infrastructure to bring in. Italy gets its gas from LNG terminals and pipelines that come from many regions. Italy worked faster to transition away from concentrated sources after the energy crisis in Europe. This made LNG a more flexible option for imports.

As per Italy Import Trade Analysis by Import Globals, a recent examination at Italy's imports shows that they changed: imports from some sources through pipelines went down, while imports from others through pipelines went up. LNG imports also went up.

When We Depend on Gas, Two Risks are Linked

Risk to Physical Supply: If there are problems with upstream production, pipelines, or LNG flows, it can make products harder to get.

Price Risk: As per Italy Exporter Data by Import Globals, when the market is tight, gas prices might go up a lot, which means that businesses, homes, and power companies all have to pay more.

Italy has solutions to decrease physical risk, like gas storage and strategic reserves, which act as buffers during shocks. But storage can't replace imports forever; it only gives time for changes in policy, new sources of supply, and changes in demand.

4) How Energy Imports can be Risky for Commerce

There are a Few ways that Importing Energy can make Trade Less Stable:

A) The trade Balance is getting Worse (the "Energy Deficit" Problem)

When energy prices go up, Italy has to pay more for fuel from other countries. Even if exports stay the same, the trade imbalance could get greater. This influence can get so strong that it changes the current account.

As per Italy Importer Data by Import Globals, one way to tell how awful this might be is to read the study from Italy's central bank. After the price increase in 2022, Italy's energy deficit grew to be quite substantial compared to GDP. This was a big reason why the current account balance got worse.

B) Stress on Businesses to be Competitive

Some elements of Italian industry, such metals, ceramics, glass, chemicals, paper, and components of food processing, utilize a lot of energy. Costs of production go higher when energy costs go up. This means that businesses have to either make less money, raise prices (which could make people want to buy less), or manufacture less.

C) How Inflation Affects Families

As per Italy Import Trade Statistics by Import Globals, the expenses of transportation, logistics, and many other things go rise as energy prices go up. This is because the price of energy goes increased in both direct and indirect ways. This can make consumers spend less money and put more pressure on the government to help, which is another macro vulnerability that isn't directly related to the economy.

D) The risk of Putting too much Infrastructure and Routes in one Place

The physical pathways are still vital, even if the suppliers are different. Strategic assets are things like pipeline corridors, LNG terminal capacity, and networks for regasification, storage, and transmission. If there is a delay or a difficulty, it could make supply tighter and prices go up at home.

5) Why the Weakness is "Sticky," or Hard to get Rid of Rapidly

AS per Italy Import Shipment Data by Import Globals, Italy can't stop depending on imports right once because it takes a long time to change energy infrastructures and industrial processes. It takes years to build new power plants, modernize the infrastructure, improve storage, increase the use of renewable energy, and switch heating and transportation away from fossil fuels. The economy still needs a continuous supply of energy every day, though.

This is why Italy's energy plan is shifting away from "self-sufficiency" and toward decreasing risks. The main goal is usually to reduce the number of providers and channels that people use. Add greater flexibility (LNG capacity, storage, and demand response), whenever you can, speed up the production of low-carbon energy at home, make things work better so that the economy doesn't have to get as much energy from other countries to manufacture stuff.

6) What will make Italy safer in the future?

As per Italy Import Export Trade Analysis by Import Globals, there are a number of things that can make Italy's commerce less vulnerable over time:

More Renewable Energy made at Home: Using more renewable energy sources means you don't require as much fossil fuels and you're less likely to be affected by changes in global fuel prices.

Electrification: Switching heating and transportation from oil and gas to electricity can cut down on direct fuel imports, especially if the country makes more electricity from renewable sources. Better insulation in houses, more efficient industries, and smarter demand management all help to minimize the amount of energy needed.

Flexible Gas System as a Bridge: In the medium term, LNG capacity, a variety of pipeline sources, and storage are still very necessary to minimize supply shocks from becoming economic shocks.

As per Italy Export Import Global Trade Data by Import Globals, the increasing importance of LNG in Italy's gas balance is a recent manifestation of the "flexibility" strategy. This helps diversify when supplies from the pipeline are not reliable.

Last Thoughts

Italy's dependence on energy imports is not a temporary issue; it is a permanent feature of the economy. Italy buys oil and gas, therefore global commodity prices have an effect on its trade balance. These imports can swiftly turn shocks from outside the country into inflation, stress on businesses, and a worsening of the current account. The main goals of policy are to reduce the need for fossil fuels over time (through renewables, electrification, and efficiency) and make the transition stronger (via more gas supply routes, LNG flexibility, and storage buffers). If Italy can break the relationship between economic activity and imported fossil fuels, its trade will be less vulnerable during the next global energy shock. Import Globals is a leading data provider of Italy Import Export Trade Data.

FAQs

Que. Why does Italy buy so much energy?
Ans. This is because the US doesn't make a lot of oil and gas, and fossil fuels are still the dominant source of energy, especially for heating, transportation, and some parts of industry.

Que. Which fuel is more dangerous: gas or oil?
Ans. Both are crucial. Gas can generate problems with supplies and prices that change quickly and affect power, heating, and industrial all at once. On the other hand, it costs a lot to bring in and move oil.

Que. How do energy shocks affect Italy's trade balance?
Ans. Even if exports keep the same, the trade deficit or current account can get worse if oil and gas prices go up.

Que. What is the best method for Italy to become less dependent on imports in the long run?
Ans. We need to grow domestic renewables, make things more efficient, and electrify heating and transportation so that the economy needs less fossil fuels from other countries.

Que. Where to get detailed Italy Import Export Global Data?
Ans. Visit www.importglobals.com.