Gas shortage hurting regional industries: Manufacturing Australia

Manufacturing Australia’s new chairman Sue Morphet has said the shortage of affordable gas is harming regional businesses.

Manufacturing Australia’s recently- updated policy agenda lists energy affordability as an area the lobby group is concerned about, in terms of Australia’s energy supplies having high value-add potential and their effective use impeded by the carbon tax.

Energy-intensive gas user Incitec Pivot, a member of MA and a regular commenter on rising gas prices, was cited by Morphet as a company being disadvantaged by high prices.

"They add 30 times value to the gas, but then that fertiliser goes on to agriculture and the like, and in turn they can build and value add to the Australian economy," said Morphet in comments reported by ABC Rural. She also said that Incitec had cancelled plans to open a factory due to gas prices.

Last week it was reported by Manufacturers’ Monthly and others that AGL had signalled it would raise prices for commercial users by 50 per cent by 2016.

The role of exports has been cited as a factor pushing prices upwards, with critics saying that domestic prices in energy-rich Australia were becoming more influenced by export prices to energy-poor customers such as Japan.

The Australian Petroleum Production and Exploration Association has dismissed calls for measures such as a domestic gas reservation policy, claiming that this would discourage exploration and in increase prices.

"Introducing gas reservation policy in Australia would do nothing to stimulate the exploration and development needed to deliver new gas supplies and put downward pressure on prices," said APPEA’s CEO David Byers.