The Australian natural gas industry expressed concern over federal government’s decision to place temporary price caps on gas as a way of easing the financial burden on the country’s gas consumers.
Prime Minister Anthony Albanese said late last week that the Australian government will partner state governments to “shield Australian families and businesses from the worst impact of predicted energy price spikes.”
The proposal is to set a 12-month gas price cap of $12 (Aus.) per gigajoule on new wholesale gas sales by producers in the East Coast market covering Queensland, New South Wales, and Victoria.
Substantial gas price increases have occurred in those states in recent months due in part to the unreliability of other energy supplies as well as the fall-out from pressure on global energy markets attributed to the Russian invasion of Ukraine.
Australian Petroleum Production & Exploration Association (APPEA) chief executive Samantha McCulloch said a price cap on gas will force prices higher for consumers because it will kill investment confidence and reduce future supply.
“This heavy-handed radical intervention has been conducted with no prior consultation with industry to consider specific measures and warn of potential risks to Australia,” she said.
Woodside Energy Ltd. chief executive officer Meg O’Neill, who is also APPEA chair, said the government’s policy will not address falling domestic gas supply and the increasingly important role of gas in providing dispatchable power.
“These are the primary factors that are driving higher energy prices in the east coast gas market, rather than solely the impact of the tragic war in Ukraine,” O’Neill said.
“No one wants to see energy shortages and gas rationing. We must develop a comprehensive longer-term solution that addresses gas supply and reliability, the overall energy mix and infrastructure, without undermining the market-based economy,” she added.
