Warnings CSG policy will see gas prices rise

Gas prices will increase as a result of the New South Wales government's decision to restrict the exploration for coal seam gas (CSG), it has been claimed.

The petroleum industry is warning that supply problems and rising prices could result from the decision, with 95 per cent of the state's gas coming from other states or countries, the Daily Telegraph reports, compared with Queensland which locally sources all its gas.

Energy minister Chris Hartcher has received a warning from the Australian Petroleum Production and Exploration Association (APPEA), explaining that prices will rise as a result of the state's decision.

It has also been reported that premier Barry O'Farrell overrode the policy that the energy minister came agreed upon with the gas industry - a move which the industry is not happy about.

The premier put in place a two kilometre exclusion zone around households and other important agricultural sites.

One of the country's biggest gas suppliers, AGL, warned that prices would go up when the decision was originally announced.

The company explained: "The absence of multiple new sources of supply in NSW will add to substantial upward pressure on gas and electricity prices in the state."

It is AGL's position that the mining and extraction of CSG is not harmful to humans or the environment.

Posted by Callum Fleming