High domestic gas prices are here to stay in Australia, with industrial customers still experiencing prices two to three times higher than historical levels, the competition regulator has warned.

Despite a noticeable improvement in the gas supply outlook for the east coast gas market in 2019, the Australian Competition and Consumer Commission said prices would only be reduced materially beyond 2019 if the gas supply was increased significantly. This includes allowing unconventional gas fields to be produced.

“We continue to urge state governments to adopt policies that consider and manage the risks of individual gas development projects, rather than implementing blanket moratoria and regulatory restrictions,” the ACCC’s fourth interim report on its inquiry into Australia’s wholesale gas supply arrangements said.

The report said there has been a noticeable improvement in the gas supply outlook for the east coast gas market in 2019, so users are less likely to experience supply problems next year, but many industrial users of gas are still facing difficult long-term investment decisions and questions about their long-term operations.



The inquiry was established by the Turnbull government early last year, to publish regularly – until 2020 – on changes occurring with the supply and pricing of gas in Australia.



The ACCC says that, since its first report in September 2017, there has been a significant improvement in the gas supply outlook of the east coast gas market, with indications there will be sufficient gas for 2019.

There has been a significant reduction in forecast gas consumption by gas-powered generators next year, and more gas producers are actively selling gas into Australia’s domestic market, to meet a commitment to the Turnbull government to offer gas to domestic customers first before selling it overseas.

The treasurer, Scott Morrison, said the report proved the Turnbull government’s policies had been working.



“That heads of agreement that was signed between the commonwealth and those suppliers has been producing the results that we sought to achieve,” Morrison said on Thursday.

“It is clear that without this work being done by the ACCC, initiated as part of our plan for more reliable energy and lower cost energy, whether it’s for household consumers or commercial industrial users – what we’ve been doing with the gas inquiry has been playing a critical role.”

But Labor said the ACCC had confirmed that the government had failed to resolve “Australia’s largest ever gas crisis”.

“The ACCC’s July 2018 gas inquiry interim report released today highlights the high prices still being paid by Australian industry, saying ‘gas users are still finding market conditions extremely challenging as gas prices remain at two to three times higher than historical levels’,” Mark Butler, the shadow energy minister, said in a joint statement with Jason Clare, the shadow trade minister.

“The gas crisis isn’t over, Australian manufacturers are paying the cost and workers will pay the price.”

