Illawarra manufacturers are calling for the government to step in to address the soaring price of gas.
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David Bridge, Chair of Illawarra manufacturers body i3Net said in light of wholesale gas prices reaching $40 a gigajoule, well above January's low of $6 per gigajoule, governments needed to take action.
"This immediate concern we've got about the skyrocketing cost of gas, the first principle should be looking after Australian consumers," he said.
In the past few days, the Australian Energy Market Operator (AEMO) capped the price of gas in NSW and other east coast markets after surging rates in Victoria saw spot prices reach $382 a gigajoule.
Prices have been chaotic in Australia as a number of factors converged.
Prices on the international market have soared since the Russian invasion of Ukraine and sanctions on the supply of Russian gas to Europe.
Australia has largely been insulated from these global fluctuations until recently, when demand for energy increased as cooler temperatures set in, coupled with a number of coal fired power plants failing or shutting down for maintenance.
While the price spikes have so far been confined to the wholesale market, leaving consumers off the hook with the exception of customers of gas retailer Weston Energy which was unable to trade in May 23, this has had an impact on gas users such as manufacturers who are forced to buy on the spot market when additional supplies of gas are required at short notice.
Locally, Mr Bridge said this could impact large gas users such as BlueScope, as well as manufacturers in the gas sector such as CoreGas and BOC, which have a sizeable footprint in the Illawarra.
"They are manufacturing businesses that will be feeling this very keenly," he said.
So far, the federal government has resisted pulling the so-called gas trigger mechanism, which forces gas producers to reserve supplies for the domestic market, however Energy Minister Chris Bowen said he was considering all options.
Whatever decision the government makes, Mr Bridge said, manufacturers would be looking at either passing on or recovering costs.
"The inflationary impact of energy, whether it be electricity or gas, someone needs to pay for that."
Plans for a gas import terminal in Port Kembla could allay future cost increases, Mr Bridge said.
"The amount of gas that was intended to bring in through that gas import terminal is such that it would dramatically increase the amount of supply into the market and basic economics would say if you increase the supply, and you don't have a supply crunch, then that has a deflationary impact on the price of gas into the market."
Any business buying gas brought into NSW from the terminal would be competing with buyers on international markets, where the price of gas is generally higher. Unlike Western Australia, which reserves a portion of its huge gas reserves for domestic consumption, there is no requirement for East Coast gas producers to allocate gas locally.
Richie Merzian, climate and energy program director at think tank the Australia Institute said as Australia is the largest gas exporter globally, Mr Bowen should look at reserving supply for domestic consumption.
"Australia doesn't have a gas supply problem; it has a gas export problem. As long as Australia remains dependent on gas and coal, Australian consumers will be over the barrel of global fuel prices influenced by events beyond our control," he said.
"Allowing global coal and gas companies to export vast quantities of our resources may have seemed like a good idea at the time, but it has locked us into exposure to volatile global prices, making Australians vulnerable to price shocks from global circumstances beyond our control."
Mr Bridge said governments should focus first on local manufacturers.
"We've got all this gas that we're selling to the world, but Australian consumers are paying a premium on gas that's generated on Australian soil. You would think that you would find some policy setting to ensure there's adequate supply of gas into the Australian domestic market."
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