Gas prices set to rise

Are we to believe gas producers are concerned about the price we pay and want to produce more coal seam gas to lower it? Or are they pushing for more CSG in NSW because they want to export it overseas for bigger profits?

Australia’s peak body representing the coal seam gas (CSG) industry – APPEA – would have us believe the campaign to stop CSG is the cause of rising prices, stating recently:

“Rising gas prices are something the people of NSW may have to get used to unless the industry can get on with developing NSW gas resources… For this, they have local anti-CSG activists to thank.”

Any expansion in gas production will see more exports and higher prices, not cheaper gas

Gas prices in eastern Australia are low by world standards because they are not yet linked to international prices. This will change next year with the completion of the first of three large liquified natural gas (LNG) facilities that will turn gas into a liquid to be shipped overseas. Gas producers will be able to choose to sell the gas in Australia, or ship it overseas. The eastern Australian gas market (that has been $3-$4 per gigajoule) will be linked to the world market and the world price, which sits at about $9 per gigajoule.

In fact, a recent report by the NSW Government Chief Scientist concluded:

“Gladstone’s LNG plants in Queensland will prepare huge volumes of gas for export to Asia where the gas price is significantly higher, meaning pressure on gas supply and price rises at the domestic level are anticipated in the short to medium term. This impending increase in export capacity is anticipated, by 2014, to lead to a greater production need, and will also mean that Australian east coast prices will rise to meet higher international prices”.

The growth of CSG in eastern Australia is what has made the LNG facilities viable. Without this the eastern market would not produce enough gas to make the LNG plants viable. Gas producers want to export gas overseas because the higher price means bigger profits. This is why there’s a push for more CSG in NSW. It has nothing to do with concern about price rises. Any expansion in gas production will see more exports and higher prices, not cheaper gas.

Special meeting – Sunday, 2pm, September 15

Thirroul Railway Institute Hall. Map

Independent think tank The Australia Institute is researching the impact of CSG growth on gas prices, and Mark Ogge will present their key findings. All welcome!

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