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National domestic gas strategy still needed to secure affordable gas for industry - 4 March 2019

National domestic gas strategy still urgently needed to secure affordable gas for industry

 

The future of Australian industrial gas users still hangs in the balance with swift action needed to increase affordable gas supplies and reform the market in line with the long-term interests of customers.

As identified by the United States Studies Centre late last year, a permanent 25 per cent increase in the domestic price of gas will cause a permanent annual economic loss of $8.7 billion1.

“This is not a one-off economic loss, it’s a recurring year-on-year hit to the nation’s GDP,” said Samantha Read, CEO of Chemistry Australia ahead of the Australian Domestic Gas Outlook in Sydney.

The ACCC has also warned high gas prices, supply constraints and lack of market transparency are forcing key businesses in the chemistry sector to consider closing or moving their operations offshore.

Manufacturers, particularly chemistry industry manufacturers2, currently bear a substantial portion of the burden of costly, unreliable gas supply.  More significantly, around one in every four Australian manufacturing workers work in heavily gas-reliant sectors and another 56 per cent work in related industries that do business with these manufacturers3.

In 2017, commercial and industrial businesses accounted for 41 per cent of gas consumption in eastern Australia; at least 10 per cent more than either the electricity sector or residential and commercial customers4.

It is clear that despite government intervention to increase gas supplies to domestic customers, Australia’s gas market is still not delivering outcomes that are in the long-term interests of consumers.

Representing member industrial gas users and their downstream customers at the conference, Chemistry Australia will reiterate the need for a comprehensive plan that deals with the growing body of evidence of structural failures, particularly within the East Coast Gas Market.

“The damage from high gas prices is being felt across supply chains and by households,” Ms Read said.

“Australia has an opportunity to continue adding value to its abundant gas resources, generating greater wealth for the economy.

“To do this, action is urgently needed to develop a comprehensive national domestic gas strategy that prioritises reliable, affordable gas for consumers.”

 

1. The United States Studies Centre, It Doesn’t Have to Be That Way, p10
2. The United States Studies Centre, It Doesn’t Have to Be That Way, p11
3. The United States Studies Centre, It Doesn’t Have to Be That Way, p4
3. Australian Energy Regulator, State of the Energy Market 2018, p182


Media contacts:

Shayna Welsh – swelsh@chemistryaustralia.org.au or 0448 660 443

 

The Australian chemistry industry currently supplies 109 of Australia’s 111 industries and contributes around $11.9 billion to the Australian economy every year.  The Australian chemistry sector is a significant industrial user of gas, with many of its member companies located on Australia’s East Coast where gas supply has become increasingly expensive and insecure. Gas is particularly essential to the business of chemistry. It’s important for process energy, and it is also a non-substitutable ingredient for advanced manufacturing. The Australian chemistry industry uses 10 per cent of Australia’s domestic gas for its molecular properties to create a huge range of products essential to our everyday lives. These include fertilisers for crops, cleaning products for health and hygiene in homes and hospitals, and smart packaging to keep food fresher for longer.

 

 

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