EUAA: Next government must solve gas crisis

gas EUAA

The Energy Users’ Association of Australia (EUAA) has released a National Gas Strategy Discussion Paper that poses a range of potential solutions to the gas crisis on the east coast and calls for the next government to make gas market reform a priority.

“Whoever wins the upcoming federal election must make solving the gas crisis a priority before we run out of time and options,” EUAA chief executive officer Andrew Richards said.

“It’s not too late to fix this, if we act quickly and decisively.”

Since Australia has commenced exporting gas via the east coast LNG terminals, the cost of gas for Australian users has gone up by as much as 300 per cent, according to the EUAA. While the market has softened in the last 12 months, gas costs are still 200 per cent higher today than they were four years ago.

Supply constraints including state-based moratoria, a lack of genuine competition, low liquidity levels, poor transparency and lingering issues with pipeline pricing are all issues that need to be addressed.

“We need to recognise that mistakes have been made in the past and that we have failed to strike the right balance between maximising LNG exports and maintaining a reasonable price for Australian gas users,” Mr Richards said.

Related article: New development for Newcastle LNG project

Many industrial gas users are reporting that if costs do not come down to more sustainable levels we are highly likely to see significant demand destruction, jobs losses and higher prices of many day to day items used by every Australian.

“The EUAA acknowledges the Federal Government has taken some actions to address this situation but unfortunately it has not been enough and clearly more needs to be done,” Mr Richards said.

The EUAA discussion paper seeks to kick start the gas market reform conversation that seems to have fallen off the political radar over the past 12 months. It puts forward options ranging from a COAG Energy Council led market reform process through to direct government assistance and market intervention.

Many of the policy and regulatory options put forward in the discussion paper borrow heavily from initiatives either already in place or being seriously contemplated in electricity markets such as asset underwriting and funding assistance.

Read the discussion paper here.

Related article: AEMO: Further gas investment needed