There is good news for manufacturers and industrial users in the latest report on natural gas pricing – but householders in Victoria and NSW may feel they are missing out.
As we have pointed out recently, the gas industry has been doing its bit to ensure supply meets demand – especially for big manufacturing employers who have been concerned about rising prices caused by tight supply.
The problem for household customers is the lag between wholesale and retail price changes, as well as the overall continuing expectation of tight supply, especially on Australia’s east coast.
The Gas Price Trends Review 2017 this week shows wholesale gas prices for large industrial customers fell in all east coast states in 2017.
Prices dropped the most in Queensland, where industrial customers enjoyed an 11 per cent reduction in 2017 compared to the previous year, the report found.
As we have previously noted, Queensland is the state which has done most to alleviate the East Coast gas supply squeeze and take the pressure off tens of thousands of manufacturing jobs.
However, as Queensland Resource Minister Anthony Lynham acknowledged today, more gas is needed to further drive down prices – for the benefit of households as well as small and large business consumers.
“Queensland has been doing the heavy lifting on boosting gas supply since 2016,” Mr Lynham said, adding that the Government was committed to doing more to liberate new gas supply for industry and consumers.
“Gas is a feedstock as well as an energy supply, and those costs impact on employers’ ability to create jobs.”
Mr Lynham called on the Federal Government to “invest in some infrastructure and encourage gas exploration and development”.
He might have added that it would be helpful if Victoria – the state with the biggest household gas network – were to remove its globally unprecedented ban on natural gas development.
Victorian Opposition energy spokesman David Southwick said Victorian household gas prices had gone from the nation’s lowest to highest in the past two years.
“Not content with making electricity unaffordable and unreliable through the 40% Renewable Energy Target, (the Government) has now done the same with gas prices through the gas ban,” he said.
As many as 70,000 Victorians were without power yesterday as extreme heat strained the power grid.
The gas price report, prepared for the Council of Australian Governments (COAG) Energy Council, showed the average gas price for South-East Queensland industrial customers had dropped to $9.69/GJ.
This was in contrast to anti-gas activist claims that the price was as much as double that amount – as was noted by the Chief Executive of the Australian Petroleum Production and Exploration Association, Dr Malcolm Roberts.
“In 2017, the media often reported anecdotes about contract offers of $18 or more to industrial customers,” Dr Roberts said.
“Now, with the report to COAG, we have a comprehensive, independent analysis which shows…that the average delivered price for large industrial customers is $10.08/GJ, with the wholesale gas component of that price $9.19.”
Dr Roberts said it was time to put aside political maneuvering and remove illogical blockers to natural gas development.
“Governments in Victoria and New South Wales should squirm when they read the report.
“Victoria now has the most expensive wholesale gas in the market. NSW is almost entirely reliant on interstate supplies of gas, mostly coal-seam gas from Queensland.
“The political gestures of bans and moratoriums may feel good to these state governments but customers in these states are paying the price.”
The gas price report underlined a “simple, inescapable truth”, Dr Roberts said.
“The only sustainable way to place downward pressure on gas prices and to improve energy security is more gas supply and more gas suppliers.”