New report finds gas prices to soar, cautions against intervention

A report from the Grattan Institute predicts liquefied
natural gas exports will be worth $60 billion a year and significant domestic price rises,
though advises against intervention in the market.

“By 2018 east
coast gas, added to growing Western Australian supplies, could create the
world’s biggest gas export industry, worth $60 billion a year,” the
report, titled Gas at the crossroads, states.

The report’s author, Tony Wood, said that attempts to
reserve and subsidise gas for local users should be resisted, as these would do
nothing to create more gas and would create more problems than would be solved.

Late last month a coalition led by the Australian Workers Union launched the Reserve Our Gas campaign, arguing that the need for
action was severe and that criticisms of a gas reservation were misleading.

The AWU’s national secretary Scott McDine said these
claims were “demonstrably false”.

“The
same multinational gas companies extracting our gas are doing business all over
the world,” he told Fairfax.

“They’ve
just somehow convinced Australia to give them a special deal.”

Research by BIS Shrapnel for
Reserve Our Gas claims the cost of doing nothing would lead to price increases that would shut one in five
heavy manufacturers in the next five years, cutting 91,300 industry jobs.

The Grattan Institute
research forecast wholesale gas prices would double to $9 per gigajoule as the
local market was linked to international prices.

For households, heavy users
of gas would see prices rise by $435 a year in Melbourne, $225 in
Sydney and $200 in Adelaide.