Believe it or not, the price jump you may have noticed on your energy bill has little to do with the supposed “gas shortages” according to energy researchers at Melbourne University.
“Consumers don’t need to worry about there being no gas in the pipe,” Tim Forcey, an engineer with more than 35 years in the energy and petrochemicals industries, told The Sydney Morning Herald.
“But certainly the gas is a lot more expensive than it used to be, and that’s going to stay.”
Prices are predicted to sky-rocket in retail electricity and gas when they’re adjusted after July 1 and Victorians’ suffering will come next January at its annual price reset.
Forcey, along with Dylan McConnell, conducted a study at MU’s Climate and Energy College challenging forecasts in March by the Australian Energy Market Operator (AEMO) of “shortfalls” of gas supplies within 18 months.
The study also questioned AEMO’s call for new pipelines and coal seam gas fields as a resolution.
Labor’s energy spokesman in NSW Adam Searle said CSG was “certainly not the answer” to high gas prices.
“Apart from concerns about its impact on prime agricultural land and water, it is the most expensive gas that can be produced,” he said, explaining that if companies sitting on gas supplies did not make more of them available to the Australian market, governments should force their hand.
“They have an operating licence to export the gas, they don’t have a licence to rob the community blind,” Searle said, referring to the fact that Australia exports two-thirds of its gas overseas.
The MU report found that AEMO’s study amounted to a lot of scaremongering, and likely didn’t take into account how much gas demand would drop in response to escalating energy prices — especially as most consumers will lean towards energy-skimping products or ditch gas altogether in favour of energy.
“You’re crazy to go with gas now,” said Hugh Saddler, an honorary associate professor at the Australian National University.
“Reverse-cycle air conditioning is so much cheaper.”
As more consumers dump their gas connections, some are deciding to not take it up in the first place — a new suburb straddling the ACT-NSW border won’t even be connected to grid according to Saddler.
The full extent of rising costs has yet to unfold but industry bills have risen in recent years from $3 to $4 per gigajoule for gas to as high as $20 for some contracts — another reason MU researchers say demand for gas will drop more than AEMO has predicted.
AEMO’s study found an annual shortfall possible of as little as 0.2 per cent for either gas or electricity, but any demand reduction or added supply would narrow or close the gap, the MU report said.
Forcey said AEMO already lowered its domestic industrial gas demand estimates for 2020 by 9 per cent this year and would most likely lower it again as firms cut back on use.
Wholesale prices have also jumped, leaping to more than $100 per megawatt-hour across the eastern states.