Australian Industry Group Welcomes Study of Domestic Gas Market

“The study into the domestic gas market announced today by the Minister for Resource and Energy, Gary Gray, is welcome.  It will focus attention on the challenge of maintaining secure supply for local industry at competitive prices, given the immense export boom on the one hand and a production clampdown on the other,” said Ai Group Chief Executive, Innes Willox.

“For some time, Ai Group has been highlighting the risks to domestic gas users posed by the large scale export of gas from Eastern Australia.  As we indicated in a study we released in 2012, Large scale export of East Coast Australia natural gas: unintended consequences, major sections of industry are facing critical gas supply difficulties and Australian gas customers are facing very steep rises in gas prices.

“For many years Australian industry has benefited from the availability of competitively priced energy.  However, in the past decade or so this source of advantage has been eroded as energy prices have risen very rapidly.  The removal of this source of cost advantage has come on top of the strong Australian dollar and the rise in our relative unit labour costs and is a central feature in our current status as a high-cost economy.

“The Government’s new study should look at the likely evolution of market conditions both in the next few years and over the coming decades in the face of two serious pressures: large-scale gas exports and emerging regulatory restrictions on accessing and developing Australian gas reserves.

“The study should also examine the appropriate policy responses that will ensure that the domestic gas market is liquid and transparent so that domestic gas customers retain access to competitively priced gas.  This should cover both household and industrial customers for whom gas supply is a key input into production.

“While the study proceeds there is much to be done. Wholesale gas prices are doubling, supply is already squeezed and much gas development has stalled in response to community fears about fracking.

“It is urgent that all levels of government work to ensure that, at a minimum, gas can be sustainably produced and sold in a transparent market,” Mr Willox said.

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LNG World News Staff, May 27, 2013; Image: AI