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posted on:
February
10
2014

Protecting our domestic gas is critical

 

Source: The Age, 10 February 2014


Queensland's power company Stanwell declared last week it would mothball the biggest gas-fired power station in the state. Rather than using its gas to make electricity, Stanwell is better off simply selling its gas and booting up its old coal-fired facility again.


It is a bizarre turn of events, although now quite plausible, that operators such as Stanwell may sell their gas back to the suppliers themselves; the likes of Origin and Santos. Anybody with long-term gas supply contracts is sitting quite pretty.


For manufacturers and consumers alike, however, the soaring price of gas is disturbing.


The rush to export LNG to China has thrown up a massive distortion in the market. It is worth more to the big suppliers to export LNG than sell gas locally. As a result, Australia, one of the world's foremost gas producers, faces a shortage. Panic is afoot, prices are spiralling out of control. The key players are all scrambling to lock in supply.


Despite this impending train wreck - rampaging prices will have a pronounced effect on all businesses and consumers - there is yet to be a serious debate about a domestic gas reservation policy.