East coast gas problem: a cartel of producers controlling the market and gouging consumers

Commenting on the increase in electricity prices by up to 20% on July 1, Bruce Robertson, Gas/LNG Australasia analyst for the Institute for Energy Economics and Financial Analysis said: “Australians need answers for why gas prices have fallen globally in recent years while here they have risen to levels above the north Asian market, the most expensive market for gas.

“The price of gas in Japan is A$7.11/GJ, approximately 40% less than South Australian electricity consumers are paying for their gas. A substantial proportion of gas consumed in Japan comes from the Moomba gas fields in South Australia.

“The Australian gas cartel is restricting supply to the domestic market in order to force up the price. This cartel of producers guard the information on prices, reserves and production costs that are released to the Australian market. By controlling the information they control the price.

“Prior to 2014, Australians paid $3-4/GJ. Energie the operator of the Pelican Point power station said that they had contracted gas for $8-12GJ when they recently re-opened. Taking the mid-point it means that South Australian consumers are paying nearly three times the price they used to for gas just three years ago.

“Santos is subsidising its loss-making LNG exports by gouging the domestic consumer. Santos’ GLNG partners are said to be buying export gas from it at just $3.50 to $4 per gigajoule at current depressed oil prices. At the same time the Australian manufacturing industry is grappling with prices anywhere between $10 to 20 per gigajoule.

“It’s surprising how relaxed the Australian public is about this price gouge. In many other countries, they’d be rioting on the streets.”

Bruce Robertson (Australia) P: +61 434 197 932 E: brobertson@ieefa.org
Media: Brami Jegan P +61 448 276 945 E: brami@holdfast.global

IEEFA conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. More here on IEEFA research: http://ieefa.org/category/subject/reports/

HoldfastEast coast gas problem: a cartel of producers controlling the market and gouging consumers