A new Grattan Institute report, Gas at the crossroads: Australia’s hard choice, shows that Australia’s developing gas export industry will deliver significant economic benefits to the economy.
However the emergence of an Australian gas export industry, projected to be worth $60 billion a year by 2018, will drive price increases in the domestic market, since domestic consumers will have to pay gas suppliers the same high price that suppliers can fetch on the global market.
But Grattan Energy Program Director Tony Wood says that despite the increases, the emerging export industry will deliver overwhelmingly positive economic benefits for Australia.
“Governments are already coming under pressure to protect Australian industry and consumers from the price rises. They should resist it,” Mr Wood says.
“Reserving or subsidising gas for domestic use will add more costs than benefits and do nothing to increase supply. And in the long run, protection harms everyone.”
The report urges governments to remove the remaining barriers to a well-functioning market to ensure the nation gets proper value from its gas exports.
“A massive export industry is rising on our northern shores. All Australians have the right to share in its bounty,” Mr Wood says.
Australia’s oil and gas industry has welcomed the report, with APPEA Chief Executive, David Byers, saying “Leadership is urgently required to allow for the responsible exploration and production of natural gas in NSW and Victoria to secure supply and put downward pressure on rising prices.”
“Natural gas is vital to millions of households, but also to the commercial, industrial, and agricultural sectors that rely on natural gas for the manufacture of products such as chemicals, plastics, pharmaceuticals, fertilisers, paints, pesticides, and cosmetics, and the production and processing of food and fibre.”
“Bi-partisan support for natural gas production in Queensland has resulted in tens of thousands of jobs, regional investment, and a $65 billion industry.”
Click here to read the report online, and for more information on Australia’s emerging gas export industry, keep an eye out for the February edition of Utility.