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Glacial progress on gas crisis cold comfort to industry

"Yesterday's meeting between the Prime Minister and the gas producers represents little progress on a crisis that is damaging Australian businesses, and the Government needs to hold open the door to dramatic intervention," Australian Industry Group Chief Executive Innes Willox said.

"We welcome the measures to improve transparency in a murky market and to bed down gas supply to the electricity generators that keep our grid stable. But gas producers and exporters appear to be in denial that there is a serious imbalance between gas supply and gas demand in Eastern Australia.

"Gas prices are skyrocketing far beyond parity with export prices. While there is a lively debate about issues in the pipeline and retail segments and how to improve them, there has been no major change in those sections of the market that can explain the rise in gas prices offered to industry from around $6 a gigajoule two years ago to as much as $24 a gigajoule today.

"The gas market is out of balance. If government and suppliers cannot act fast to free up gas for the domestic market, while putting in place longer term supply and demand side measures, the only way to rebalance the market is for prices to keep rising until enough gas users go out of business.

"No business that was facing gas price disaster this morning will have been reassured by the outcome of yesterday's meeting.

"Ai Group has proposed  commercial gas swap arrangements, backed up by a robust national interest assessment of existing and future gas exports. Those steps remain open to the Government and the gas industry. With every day that passes the price crunch hits more energy users, threatening jobs and investment across basic chemicals, food processing, metals manufacturing, pulp and paper, and much more. Time is running out," Mr Willox said.

Media Enquiries: Tony Melville – 0419 190 347