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Falling gas prices fail to reach consumers
Australians living on the east coast are paying significantly above export parity prices, new research has found.
Falling gas prices fail to reach consumers
Australians living on the east coast are paying significantly above export parity prices, new research has found.
The ACCC’s Gas Inquiry 2017-2025 Interim Report showed that while Australians are paying too much for gas, the COVID-19 pandemic has not significantly impacted supply for 2021.
“The ACCC is very concerned with the widening gap between domestic and export parity prices, which will have an inevitable impact on Australia’s industrial sector during what is already a difficult economic period,” ACCC chair Rod Sims said.
The ACCC noted that Australian contract gas prices do not reflect overseas gas prices, despite being produced in Australia.
“I am yet to hear a compelling reason from LNG producers as to why domestic users are paying substantially higher prices than buyers in international markets,” Mr Sims said.
“When we have lower gas prices around the world, and the Australian market linked to world gas markets, it is vital that Australian gas users get the benefit.”
However, the report found that the price offered to domestic gas users is falling from $9-$12 per gigajoule in 2019 to $8-$11 per gigajoule (GJ) in 2020.
While this was down slightly from the $9 to $12/GJ range observed earlier in 2019, this price decline was not in line with the significant and sustained drop in LNG netback prices, which were for 2021 delivery below $6/GJ by early 2020 and have been below $5.50 since May.
The ACCC recommends the extension of the existing Commonwealth government’s Heads of Agreement with LNG producers, due to expire at the end of 2020, because of the demonstrated capacity of LNG producers to supply additional gas into the domestic market when needed.
“As well as extending this Heads of Agreement, we think the government should consider strengthening the agreement’s price commitments,” Mr Sims said.
“For example, reference could be made to LNG netback price expectations and the prices LNG exporters could expect to receive for uncontracted gas in overseas markets over the relevant period.”
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