The Price of Gas !

Australia is one of the world's biggest natural gas exporters, and yet we are desperately short of enough of it to serve homes and industry in the eastern states.  The emphasis has been on exports and no provision was made to ensure that enough gas was set aside for domestic use.

That has been causing an ongoing battle between the farm lobbv and industrial concerns who want to extract gas from underneath the eastern states,  Unfortunately, this is below our best agricultural land and to free it and bring it to the surface would require " fracking " and that is likely to interfere with the aquifers which make the surface so productive with vegetable crops.

The partial answer sought has been work on creating a gas hub at Port Kembla which will enable giant gas carrying ships to feed gas into the eastern pipeline, either from the gas fields of Western Australia or as imports from other gas exporting countries such as Russia.

One of the problems with that approach is that the world price of natural gas seems to be ever expanding as it gains market to replace coal.  The pressure is on to reduce the amount of carbon we generate and natural gas emits less than coal when used for electricity generation.  In the past three years the price of natural gas on the world market has risen from $4 to $5 a gigajoule - to $8 to $10 a gigajoule.   It would be a supreme optomist who expected that price to remain steady.

 Australian governments of diverse political persuasions have neglected to reserve enough of the recently discovered natural gas for our own supply.  The emphasis has been on export and how this product has been the salvation of our economy, but what is involved is far more important than just cooking meals and heating water in Australian east coast homes.

Gas is critical to our economic recovery.  We need a sustainable supply at a low price if we are to sustain  manufacturing industry in this country and gas is an integral part of two important market segments which are not sustainable without it.

Two important existing Australian industries manufacture fertilizer and explosives.  Fertilizer is used both on Australian farms ands as an export and  explosives are an important tool in the mining industry.  Both need a sustainable supply and a better price structure if they are going to continue.

A hungry world is going to need more fertilizer if it hopes to feed the growing masses and Australia is growing a nascent arms industry.  One of the issues retarding a better natural gas price for industry here is  the addition of costs for export processing, which is not applicable to gas for domestic use but is applied at the point of extraction from the ground.   It is essential that such costs are removed from natural gas directed to the internal Australian economy.

The prime minister promised a price trigger for export gas control last year, and that has not yet been delivered.  It is important that this local product give Australia a marketing edge by way of supply sustainability and price competition  !