Domestic gas prices rose sharply in Melbourne, Sydney, Brisbane and Adelaide in December, while large industrial gas users still struggle to secure affordable deals with energy producers. Traditional sources of domestic gas supply such as Bass Strait are on the decline, while a lot of the gas from newer sources is being exported, meaning that users on the east coast are being exposed to international pricing. Five LNG import projects have been mooted for the east coast as a way of improving supply for domestic gas users. From The Australian:
Domestic gas prices jumped by up to 51 per cent in Melbourne last month, compared with the previous year, with Sydney rising 45 per cent, Brisbane climbing 32 per cent and Adelaide 31 per cent higher, data from consultancy EnergyQuest shows.
Users in the southeastern states are still paying up to three times historical prices of $3-$4 a gigajoule, with prices at either record or near-record levels for all major gas markets in the last three months of 2018, according to advisory firm Energy Edge…
Five competing LNG import projects have been proposed for the east coast to arrest a shortfall of supplies for domestic users as cheap volumes from traditional sources such as Bass Strait begin to decline…
The most realistic way to cut prices — rather than building Australia’s first LNG import terminals — is to ratchet up locally produced gas in the southern states to help snap the cost of paying for supplies piped down from Queensland or imported from overseas, ACCC boss Rod Sims said last year.
Wrong. The most realistic and low-cost way to cut domestic prices is to simply apply retrospective domestic reservation.
Regardless, building LNG import terminals would be an unmitigated policy disaster. All they will do is guarantee the east coast pays the Asian price plus the cost of the importation plant. In other words we will also pay for digging up the gas, piping it, freezing it, shipping it to Asia, then back again, unfreezing it, and piping it locally.