World Economy and Policy 2026, 2026(1):1

Pedal to the Metal: Natural Gas Prices and the Czech Automotive Industry

Michal Hrubý
Prague University of Economics and Business, Faculty of International Relations, Department
of International Economic Relations, nám. W. Churchilla

How do changes to the real price of natural gas following a supply shock impact the automotive industry? This paper examines the volatility of European natural gas prices and its transmission to output and prices in a case study of the Czech automotive industry. Despite an immediate drop following the supply shock, production recovers quickly and increases over the medium term. Producer prices increase immediately and then gradually return to their baseline. I document large heterogeneity between car, body, and parts producer prices. The body producers actually face downward price pressure at the end of the horizon. Moreover, producer prices respond differently to news about yet unrealised natural gas supply disruptions (supply news shocks) than to realised supply shocks, highlighting the role of market expectations: producer prices respond weakly and gradually decrease, driven primarily by car producers. I discuss the findings with respect to the demand channel and buyer-supplier relations.

Keywords: business cycles, energy shocks, natural gas, supply chains, automotive industry, local projections
JEL classification: C32, E32, L62, Q41

Published: August 25, 2026  Show citation

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Hrubý, M. (2026). Pedal to the Metal: Natural Gas Prices and the Czech Automotive Industry. World Economy and Policy, 2026(1), 1
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    34. Michal Hrubý has been a PhD candidate in the Department of International Economic Relations at the Prague University of Economics and Business since 2023. His work focuses on industrial policies, the automotive industry, and technical change. He has experience from the Vienna Institute for International Economic Studies and the German Marshall Fund of the United States.

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