The Australian Institute on the gas market

The australian institute s reaction to gas expansion 16000646 800508195 0 0 14895 300

Many Australians have been struggling with rising electricity and gas prices, with an increasing number of citizens facing utility disconnections as they cannot afford to pay their bills on time.

At the same time, the minister for energy and resources Gary Gray has recently been making a number of announcements relating to a planned expansion of Australia's international gas exports industry. Gas projects would focus on eastern Australia, an area rich with natural gas resources. These announcements have sparked the Australian Institute to look into the issue.

The Australian Institute is an independent, influential think tank based in Canberra. It researches a range of economic, social and environmental issues, with the aim of informing public debate and bringing a greater level of accountability to governmental and democratic process.

According to the Institute, households in eastern Australia - where the new, planned gas exploration studies are set to go ahead - are about to be stung by domestic gas price increases, which would see wholesale prices triple.

The Australian Institute's report on the issue, 'Cooking up a price,' concludes that wholesale gas prices will rise from $3-4 per gigajoule to approximately $9 a gigajoule.

"The increase is linked to plans to sell gas from eastern Australia overseas," said senior economist at The Australian Institute Matt Grudnoff.

"The minute Australia's domestic gas market is linked to the world gas market, the Australian price will increase."

Mr Grudnoff said that currently, Australians pay relatively low prices for gas, and that's why the industry is eager to sell it to foreign markets where the greater profit is. 

"Many in the gas industry would like us to believe that public opposition to coal seam gas (CSG) is the reason for the impending price increases. But it's the determination of the gas industry to sell to the highest bidder," Mr Grudnoff said.

He noted that it's interesting in this case that it's not a typical lack of supply which is going to drive up the prices - instead it's the introduction of CSG as a new form of supply. The Australian Institute asserted that consequently, once gas from eastern Australia is sold into the international market, consumers will be subject to global prices and pressures.

Australians concerned about how much they're spending on their utility bills may benefit from using an electricity comparison service, which can help consumers find the most competitive deal possible.

Posted by Callum Fleming