Gas protests and warnings from business

Gas protests and warnings from business
Business has criticised the government and gas companies for failing to resolve the gas crisis with warnings that it could see companies go out of business if they did not act fast.

Australian Industry Group chief executive Innes Willox called for “dramatic intervention” from the government and bemoaned the “glacial progress” on the gas crisis at Wednesday’s gas summit in Canberra.

He said calling in the Australian Competition and Consumer Commission to monitor the gas industry and extract information was just the first step and fell short of expectations.

“We welcome the measures to improve transparency in a murky market and to bed down gas supply to the electricity generators that keep our grid stable.  But gas producers and exporters appear to be in denial that there is a serious imbalance between gas supply and gas demand in Eastern Australia,’’ Mr Willox said.

“Gas prices are skyrocketing far beyond parity with export prices. While there is a lively debate about issues in the pipeline and retail segments and how to improve them, there has been no major change in those sections of the market that can explain the rise in gas prices offered to industry from around $6 a gigajoule two years ago to as much as $24 a gigajoule today.

“The gas market is out of balance.  If government and suppliers cannot act fast to free up gas for the domestic market, while putting in place longer term supply and demand side measures, the only way to rebalance the market is for prices to keep rising until enough gas users go out of business.

“No business that was facing gas price disaster this morning will have been reassured by the outcome of yesterday’s meeting.”

Mr Willox reminded the government and gas companies that the Australian Industry Group had come up with a solution of gas swaps but the clock was ticking. They had to act fast.

“With every day that passes the price crunch hits more energy users, threatening jobs and investment across basic chemicals, food processing, metals manufacturing, pulp and paper, and much more.  Time is running out,” Mr Willox said.

Opposition leader Bill Shorten said the government had to show business it was prepared to act quickly to save Australian jobs.

Visiting BlueScope Steel in Port Kembla south of Sydney, Mr Shorten said the Prime Minister Malcolm had to see things had now reached crisis level with Bluescope’s gas and energy costs increasing 100 per cent year-on-year.

“This is not sustainable,” he said.

“Australian manufacturing is at a tipping point. What we need is a government in Canberra who will actually take strong action to make Australian gas companies prioritise supplying Australian companies over their export markets.”

He said Mr Turnbull should have shown some leadership at Wednesday’s gas summit.

“He calls the companies together and Malcolm Turnbull rates himself as a formidable advocate and persuasive man, yet for these companies, it is like being flogged by a wet lettuce leaf,” he said.

“They come, listen to Malcolm Turnbull and they’ve left, business as usual. In the meantime Australian jobs are in jeopardy.”

Meanwhile the Australian Competition and Consumer Commission has put gas companies on notice, warning them it will use its powers to hand over information.

The ACCC’s three year investigation is underway as political pressure mounts on the Federal government with warnings that there will not be enough power to cover demand during the peak summer period when Australian cities will be facing blackouts.

ACCC chairman Rod Sims said the ACCC’s investigation was “an important element of the Government’s plan to make sure more affordable gas is available to industry and consumers.”

“The inquiry will examine how gas suppliers will make more gas available to Australian industry and other domestic gas users, and the effect this has on overall market dynamics. Improved transparency will provide a clear overview of the entire market and help ensure it is operating efficiently and that competition is benefiting all gas users,” Mr Sims said.

“We will be seeking to identify the use of market power and other obstructions to the efficient supply of gas, as well as publicly reporting on market information when it is needed. Equally as important, we will identify longer term measures that can address these issues.

“Importantly, the inquiry will help verify progress in changes in domestic gas supply and monitor commitments made by gas suppliers to the Government to make more gas available and also ensure gas is delivered at times of peak electricity demand.”

 



An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.