Australian gas market is failing manufacturers: Dow Chemical exec

Craig Around, the Australia and New Zealand managing director of Dow Chemical, has hit back at suggestions that Australian manufacturers are merely looking for gas subsidies.

Arnold, writing in The Australian, has responded to the Australian Petroleum Production & Exploration Association’s claims that manufacturing’s problems are to do with labour rates and bad equipment, suggesting that the issue lies with a failure in the local market for gas.

He writes that, “It is reasonable to argue that the 200 per cent price hikes and constraints on supply imposed recently on domestic industrial gas users are in fact a subsidy from domestic industry and consumers to gas export projects.”

As Andrew Liveris of Dow Chemical did over the weekend, Arnold pointed to the US shale gas boom, credited for creating a million new jobs and delivering huge benefits to that country’s industry.

The US’s increase in gas production will grow 33 per cent between 1990 and 2015, where Australia’s gas supply will grow 265 per cent in the same period, writes Arnold. He points out that while the expansion in supply in the US has led to cheaper gas, in Australia prices have recently tripled.

Arnold cites a Council of Australian Governments review a decade ago suggesting that the east coast market for gas in uncompetitive, which noted “strong fears that this current lack of upstream competition will lead to much higher gas prices once current contracts expire over the next few years,” arguing that this is now the case.