Gas Prices in the South Not Likely to Fall Says New ACCC Report

The Australian Competition and Consumer Commission (ACCC), sharing findings of its reports said that gas prices in the south will remain high in spite excess production and lowered demand from gas powered generators. There also is not expected short fall in gas in the future.

The ACCC, in its seventh report on the east coast gas market since 2015, also said that the east coast gas scenario is much different from that of the south in Australia. The prices offered in this region seems to have fallen. The south prices continue to remain on a rise. The big three suppliers of gas in Australia, Origin, AGL and Energy Australia, are still offering gas at high prices, especially for commercial and industrial use.

“While prices offered by gas producers largely fell below $10/GJ in the first quarter of 2019, prices offered by retailers, mostly to C&I [commercial and industrial] gas users, have remained in the $10-12/GJ range,” the ACCC found.

The big three retailers, as per their report enjoyed the aggregate margin of 23 per cent in the C&I market and 19 per cent in the residential market last year.

“If margins were estimated on the basis of a retailer’s cost of acquiring additional gas and selling it under current market conditions, the margin for that specific supply of gas would likely be lower,” it said.

The east coast tells a different story. Here the supply has been exceeding demand. Falling demand from gas powered generators (GPGs) and LNG producers having supplies above their current export contract commitments has resulted in surplus and will not be see a price increase in the coming days.

The ACCC also did a comparative global study on prices of C&I in Asian Countries and US and Canada and their domestic market situation with prices in the sector. They found that Australia is pricing gas lower than Asian Countries like China and South Korea and Higher than US and Canada in its domestic C&I distribution.