Lunacy as Aussie gas prices soar to record levels

By Leith van Onselen

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.

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Comments

  1. It beggars belief that this import terminal idea won’t die. The large oil and gas companies must have every politician in their pockets. I never thought i’d see governance in this country decline the way it has in the last decade. It’s seriously broken.

    • I have been advocating LNG terminals long before they were even announced. Your opposition unfathomable. It allows cheap imports of gas from other destinations, in preference to nothing. And it stops a local oligopoly from dictating local pricing. Pipelines (due to distance) are uneconomic in Australia. That is a basic fact.

      Moreover, we are running out of economic gas resources. Meaning prices will have to get a lot higher before some existing uneconomic fields are bought on line.

      But let’s not beat around the bush. It’s less than 10% of the whole, and substitution is easy. If we have no gas resources, we need to use something else, wind, coal, hydro, whatever.

  2. The high east coast gas price makes combined cycle gas turbine power stations uneconomical to build, whilst making white elephants like snowy hydro 2.0 economical.

  3. Australia’s Federal Government needs to grow a set and implement Domgas Reservation on the east side…. What an embarrassment we don’t have this in Australia, we are the laughing stock of the developed world !!!
    What other energy-rich nation would sabotage its own productive economy by putting large gas exporting corporations ahead of its own people and economy!? Ha! FFS
    #AusPol #ScoMo #Straya

  4. The most realistic and low-cost way to cut domestic prices is to simply apply retrospective domestic reservation.

    OR simply develop Australia’s gargantuan solar energy and wind resources to get rid of the need for fossil fuels forever. 💡

  5. Go Strara! Our so called leaders are sellouts, to put it very kindly. We need a hivis uprising as nothing else seems likely to fix our current corrupted system.