Gas prices will rise more than 17.6% in New South Wales this year as rising global prices for exports flow back into the domestic economy.
And it’s not just NSW. Exports from Queensland are pushing prices across the eastern states to equal those paid for exported gas.
Australian Industry Group NSW Director Mark Goodsell says prices could well spike above international parity because gas production is lagging the huge growth in export demand.
“At a minimum, gas users face a doubling or tripling of the wholesale gas prices that have underpinned key sectors of our economy,” he says.
In NSW, the Independent Pricing and Regulatory Tribunal has decided to allow for an average increase in regulated gas prices of 17.6% in 2014/15, with prices relatively stable in 2015/16.
From July 1 this year, typical annual household gas bills will rise by between $150 and $225 depending on how much gas is used.
IPART Chairman Peter Boxall said this draft decisions is based on its assessment of proposals submitted by the gas standard retailers.
Although the average price increases are lower by nearly 7% than those originally sought by retailers, they are still significant and are the third consecutive increase in gas prices in NSW.
Dr Boxall said the increases are largely due to rising wholesale gas prices.
“The ability to export Liquid Natural Gas is driving a structural change in eastern Australia’s wholesale gas market, and increasingly domestic gas prices will be influenced by what is happening in world gas markets,” he said.
Industry says the steep rises in NSW highlight the massive change caused by opening local markets to exports.
AIG’s Goodsell says IPART’s job is to focus on households but industry is the biggest user of gas in the state.
“Gas is a vital feedstock for chemicals, fertiliser and explosives, and a clean efficient fuel for aluminium, cement, food processing, foundries, paper, steel and much more,” he says.
“Some businesses will be able to pass on their costs to households and other customers, but trade-exposed businesses won’t. That means a hit to profits, reinvestment, and ultimately jobs.”
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