TheGas Price Trends Review 2017 report, prepared by Oakley Greenwood for the COAG Energy Council, has injected some overdue facts into the debate about east coast gas prices.
The report finds that, after increasing in 2016, wholesale gas prices for large industrial customers fell in all east coast states in 2017, and by 11 per cent from 2015 to 2017.
“In 2017, the media often reported anecdotes about contract offers of $18 or more to industrial customers. Now, with the report to COAG, we have a comprehensive, independent analysis which shows actual prices in the market,” APPEA chief executive Dr Malcolm Roberts said.
“The report shows the average delivered price for large industrial customers is $10.08/GJ, with the wholesale gas component of that price $9.19.
“As in 2015, when they last reported to COAG, the analysts advise “gas prices reflect the supply and demand balance”.
In 2017, “wholesale gas prices increase with distance from Queensland”.
“Governments in Victoria and New South Wales should squirm when they read the report.”
Dr Roberts said Victoria now has the most expensive wholesale gas in the market, while New South Wales is almost entirely reliant on interstate supplies of gas, mostly coal seam gas from Queensland.
“The political gestures of bans and moratoriums may feel good to these state governments but customers in these states are paying the price,” he said.
“The report underlines a simple, inescapable truth – the only sustainable way to place downward pressure on gas prices and to improve energy security is more gas supply and more gas suppliers.
“Cooler heads must prevail in 2018. The focus must move back to where it belongs – the need to ensure more gas supply and more gas suppliers.”
Queensland Minister for natural Resources, Mines and Energy Dr Anthony Lynham agreed that more supply was needed.
“Queensland has been doing the heavy lifting on boosting gas supply since 2016,” he said.
“Gas is a feedstock as well as an energy supply, and those costs impact on employers’ ability to create jobs.
“It’s time for the Federal Government to take some of the expert advice it’s now had from the Chief Scientist’s review and this COAG team. Invest in some infrastructure and encourage gas exploration and development.”