Alliance forms to protect NSW gas prices

Nsw gas prices could rise in the future 16000646 800505785 0 0 7019583 300

The chance of rising gas prices and resource shortages has caused two opposing industry organisations to form an alliance.

The Australian Industry Group and the Australian Workers Union (AWU) have joined forces, along with the Australian Petroleum Production and Exploration Association (APPEA), to lobby the NSW government on its current gas policies.

According to the organisations, a two-kilometre exclusion zone that prevents coal seam gas (CSG) exploration and production from occurring too close to towns could create a number of problems.

In a letter to ministers, reported by The Australian, they said: "Our organisations do not always see eye to eye, and continue to have serious differences of view on how to maximise the national economic benefit of Australia's gas endowment.

"However, we firmly agree that without action to develop NSW's own gas resources, the consequences will be serious, not just for the gas industry but for manufacturers, workers, households and the state."

Earlier this year, following the policy announcement, AGL Energy said it would create serious shortage problems - an issue the state was already facing.

This move will only add upward pressures to power bills across the state, the company added. 

Impact on gas prices

The CSG industry argues that the policy has crippled development in the state, which is likely to result in higher gas prices for households.

An APPEA-commissioned report suggested that NSW could face an energy crisis within three years, with wholesale gas prices across the state climbing by as much as 32 per cent by 2030.

The cost of gas was also expected to rise by a similar amount in South Australia, Victoria and Tasmania, while Queensland prices will jump eight per cent.

As such, soaring gas and electricity prices would see consumers paying $22 and $31 extra a year respectively. The NSW government also risks losing $4 billion worth of investment.

Furthermore, missed tax and royalty payments could total as much as $1.9 billion.

Chris Hartcher, state resources and energy minister, admitted he was aware of the advantages that CSG exploration and production could bring.

However, he added: "We are confident that our policies provide the basis for sustainable development while protecting our valuable water resources and the environment."

Mr Hartcher also encouraged the sector to "get on with the job" of exploring for and generating gas within the confines of the existing policy.

Posted by Callum Fleming