A $24 million plan for greater gas extraction in South Australia is nothing more than hot air that will derive no consumer benefit, according to an international energy agency.

The Institute for Energy Economics and Financial Analysis said the Australian gas industry is “milking the consumer dry” and that the State Government funding, announced last week, will do nothing but benefit producers while potentially threatening water resources.

“There is something fundamentally amiss when a state with excess supply of gas has to award a multi-million dollar taxpayer funded subsidy to major gas companies in order to supply its own consumers, who are already facing sky high bills,” IEEFA analyst Bruce Robertson said.

“This subsidy is expensive and will achieve no discernible outcome for the consumer of gas in SA apart from lining the pockets of gas producers and potentially threatening water resources.”

While the new subsidy may encourage some producers to enter the onshore gas production market in SA, Mr Robertson said a lack of pricing transparency and competition in the domestic market will see high prices continue.

The State Government believes that the best way to drive down power prices in the medium-term is by increasing competition.

“There is a lack of available gas in the national market, a situation made worse by the decision in Victoria to ban onshore conventional and unconventional gas exploration and development,” Energy Minister Tom Koutsantonis said last week.

Recent IEEFA research found that local consumers paid up to 65 per cent more during July than their Japanese counterparts for gas produced in Australia. Locally produced gas was sold in Adelaide at an average of at $13.90 per gigajoule, compared to $8.42 in Japan.

US based IEEFA’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on non-renewable resources.