Gas exports threaten Australian jobs

The price of gas in australia is increasing which could affect the economy 171 65181 0 14091217 300

Gas prices have been steadily rising Down Under and Australian manufacturers have warned unless they decrease, there will be effects on the economy.

Why is gas so expensive?

Although Australia is rapidly becoming one of the leading gas exporters in the world, with new contracts for gas suppliers to provide energy in developing Asian markets, it has created a shortage of gas in Australia.

The gas supplied will be sent overseas rather than fulfilling the need for energy in the domestic market. This is widely believed to be as a result of the fact those in the Asian markets were willing to pay triple the prices Australians currently pay for their energy.

Will this create job losses?

The number of people who could lose their jobs as a result of inflated gas prices could well lie around the 100,000 mark unless there are measures to prevent this, ABC reporter Grey Hoy reported on March 28.

Federal Government may need to intervene in order to solve the domestic gas shortage pushing up prices for households and businesses, to prevent those in the industry losing their jobs.

While there are talks of direct job losses being around 100,000 this does not account for indirect job losses in the manufacturing industry, as some companies are unable to sustain the higher cost of gas and are forced to make job cuts.

"One of the issues for Australia is we've agreed to triple our gas exports. Nobody quite understood that that would mean there wouldn't be enough gas available, post-2016, to support local industries," Rob Sindel, Chief Executive of CSR told ABC news on March 27.

The CSR factory recently closed its old chimney stack, as the rising cost of gas made its future unsustainable. Mr Sindel said it, like many other businesses, couldn't support the additional impost of energy prices.

What will it mean for the GDP?

Australia's gross domestic product  (GDP) will be affected by these increasing gas prices as Aussies are being charged more than twice what they were in the past decade, according to a Bloomberg article published on January 13.

This estimated the cost to the GDP of around A$13 billion per year as the prices could be "devastating" to the manufacturing industry.

"The short term gas supply and price issue could become the 'straw' that breaks the back of Australian manufacturing," Manufacturing Australia said in a report, entitled Impact of gas shortage in Australian manufacturing: May 2013.

What can you do at home?

If you are worried about the increasing gas prices, you could do a comparison to see if you could get lower rates from another supplier.

Posted by Paul Doyle.