PM Must Act Immediately on High Gas Prices: Australian Industry and Jobs at Risk Again

16 January 2019

In the face of soaring gas prices, Centre Alliance Senator Rex Patrick has rejected Resources Minister Matt Canavan's claims linking high gas prices to a need to develop more of its own hydrocarbon reserves.

"Australia is the world's second largest exporter of gas," said Rex. "It is disingenuous to blame gas reserves for the high price industry is again paying for gas. We have enough gas, it's just a matter of whether we give priority to Australian industry or overseas industry."

In July 2017, as a result of negotiations with Centre Alliance, an Australian Domestic Gas Security Mechanism (ADGSM) was put into place. The ADGSM was introduced to ensure there is sufficient supply of natural gas to meet the forecast needs of energy users in Australia. If LNG projects' use of domestic gas results in a supply shortfall in our domestic market, those projects can be required to limit their exports or find new gas sources.

"The threat of invoking the Australian Domestic Gas Security Mechanism was originally used by Prime Minister Turnbull to get agreement from suppliers to ensure there was sufficient gas in the domestic market to keep prices down," said Rex. "But things seem to be returning to normal wherein the gas cartels are putting their own interests ahead of the national interest."

"The Government has clearly failed in its duty to Australian industry. There is real risk that high energy intensity industries will be forced to close their doors. And once they close, they will never reopen. Thousands of Australian jobs are at risk here.

"It's worth noting that the price of gas is an input to electricity prices."

"Something has gone wrong if we have run short of supply. The ADGSM can be invoked if a shortfall is predicted. AEMO's Gas Statement of Opportunity 2018 stated there would be no shortfall in the Australian east coast market until 2030. AEMO is hamstrung by total opaqueness when it comes to gas reserves, supply and supply obligations. Rubbish into AEMO's assessments can only mean rubbish out. The government must force suppliers to be transparent.

"Clearly industry is planning on the Government not getting this right. The fact that there are five proposals for gas imports in play speaks volumes," said Rex. "If the impact of the current trajectory on industry and jobs wasn't so serious, it would be funny".

"Australian companies should be able to contract gas at between $5 and $6 a gigajoule. People must remember that this gas is owned by the Australian public."

"Unfortunately the ADGSM process starts in July and now cannot be invoked until January 2020. But that doesn't mean the Government should just sit on its hands. I'm calling on the Prime Minister to immediately deal with the lack of transparency in the market and to again meet with gas suppliers to focus suppliers' attention on our national interest."

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