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Gas

Probe into gas prices has tongues wagging

The government has instructed an inquiry into wholesale gas prices  171 6010954 0 14100122 300

There has been a fair amount of talk surrounding the state of the gas market in Australia. While consumers have been bearing the brunt of price increases, the Australian government has taken another route and ordered an inquiry into wholesale prices of gas - which could have some interesting implications if it feeds back into the retail market. 

The Australian Competition and Consumer Commission (ACCC) has been instructed to conduct an investigation into whether there is enough competition in the wholesale gas market in NSW, Victoria, Queensland and South Australia. ACCC Rob Sims noted that the year-long inquiry won't cover the retail market, but it will delve comprehensively into what Federal Minister for Small Business Bruce Billson called "anti-competitive behaviour on purchasers of gas".

"The ACCC will be considering competition levels on the east coast upstream gas market – the producer, processor, pipeline, and wholesale levels of the market. The inquiry does not cover retail," Mr Sims said in an April 13 statement.

Bruce Billson said participants in the gas market have made complaints about the lack of transparency in the gas-buying process, which has undermined their ability to purchase. 

"The Australian Government wants to ensure there is adequate competition to allow participants to operate. This ACCC inquiry will establish if Australia's eastern gas market is operating effectively," he said in an April 13 release.

Among other things, the inquiry will investigate how transparent and competitive the offers process on gas is, as well as the transaction costs and availability of information surrounding the purchase of gas. While the retail market has been left out of the inquiry, the findings will likely have an impact on all areas of the natural gas market - a crucial pillar of support for the Australian economy. 

This discussion is timely, as gas exports are positioned as a major source of income. Already, Manufacturers Australia - the lobby group that represents some of the biggest natural gas suppliers in the country - has warned that the manufacturing sector could decline by up to $120 billion by 2021 if these issues aren't addressed.

Posted by Nikki Wilson-Everett