“New gas developments are not simply a matter of flicking a switch,” ExxonMobil’s spokesperson said. “They require extensive planning, resources and capital as well as stable regulation in order to deliver critical energy supplies to Australian households and businesses.”
Last week, Woodside chief executive Meg O’Neill told investors that price caps would force the company to reconsider new spending on the assets, too. “If there’s a price cap it is very hard to see those opportunities being attractive, to be really blunt,” she said.
A gas rig at the West Barracouta wells in the Bass Strait.
East-coast gas prices have soared this year, driving record sales revenue for gas producers including Woodside, which reported more than $9 billion in sales for the September quarter alone.
Prices continue to spike as the war in Ukraine has deepened a global energy shortage, as Western nations shun Russian supplies and intensify competition for any available cargoes of liquefied natural gas (LNG). At the same time, cold weather has combined with a series of failures at Australia’s ageing coal-fired power stations to drive up demand for gas-fired electricity generation.
The manufacturing sector has been pressing the federal government to set a $10-a-gigajoule cap on wholesale gas prices, warning factories that depend on gas for energy or as a raw material are struggling to stay viable under prices currently trading at more than $20 in Australia’s south-east.
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For households, the number of customers with unpaid energy bills of more than $2500 has risen by an alarming 39 per cent, the energy regulator says, as gas prices have risen by up to 15 per cent and power bills by up to 20 per cent.
However, coal and gas companies, whose revenue stands to be affected, are ramping up warnings that such a move could deter investment needed to develop new sources of domestic supplies that would be crucial to putting downward pressure on prices in the longer run.
The gas industry insists the best way to drive down prices is to increase locally produced supplies closer to the demand centres in Victoria and NSW, where demand is highest, but traditional offshore fields are rapidly drying up.
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