Gas Crisis – Access to Fair Energy Prices


Peter Khalil: Every Australian is affected by rising energy prices. One of the reasons for the increase is the domestic gas shortage. The Turnbull government has failed to resolve Australia’s highest-ever gas prices. Let me cut to the chase. We are the only gas-producing country in the world that does not mandate that some of its gas be reserved for domestic use. Supply is not the problem. Exporting so much of our gas without reservation is the problem. The ACCC’s gas inquiry report released recently highlighted the high prices still being paid by Australian industry and other gas users. The ACCC in the report said that businesses are ‘facing difficult choices around their long-term investment decisions and long-term financial viability’, and went on to say that the gas market is unsustainable. Yet when Malcolm Turnbull had the chance to take real action to tackle gas prices by imposing export controls, he instead chose an unenforceable handshake agreement with the big gas exporters.

The Prime Minister failed to pull the export trigger control by November 2017 to ensure that Australian households and manufacturers were not being charged exorbitant prices for Australian gas. Instead, he relied on that handshake agreement, which is not grounded in any specific legislative provision. Essentially, it is enforceable only against the gas companies that are party to it—that shook his hand—and in accordance with the private terms and conditions that they agreed to. It effectively relieved the Prime Minister and the government of the need to consider triggering the Australian domestic gas security mechanism, a mechanism which provides the government with the power to restrict gas exports in the event of a shortfall. Because he didn’t pull the trigger, 2018 was not declared to be a domestic shortfall year. What has happened to gas prices? You’ve guessed it: they have not gone down, even though 2018 wasn’t declared a shortfall year.

What we have is a Prime Minister patting himself on the back for shaking hands with all of his big business mates for cutting a deal that he thought relieved him of the responsibility to take action, something he is very averse to doing. What we have is a Prime Minister neglecting his responsibility to ensure Australians have access to fair energy prices. His handshake agreement falls woefully short. It doesn’t address the core problem of Australia’s enormous commitment to LNG exports and the connection of domestic gas prices to the global energy market. Indeed, the commitment is so great that LNG operators have had to take conventional gas from South Australia and Victoria to fulfil their export contracts. This has also put significant pressure on domestic prices.

The gas crisis certainly is not over. Australian manufacturers and users of gas are paying the cost, and the workers are paying the price. It’s time that the Prime Minister admitted that his handshake agreement didn’t solve the gas crisis; it just confirmed that he is always looking after the big end of town.