ACCC boss Rod Sims slams gas suppliers


Gas prices have risen to historical highs over the past three years as domestic supplies reduce, raising fears of potential gas shortages on the east coast.

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Mr Sims said rising gas prices were pushing more businesses to reconsider relocating or even closing down due to high energy costs, adding that suppliers had not been sympathetic to the issue.

He said businesses such as polystyrene cup manufacturer Remapak, whose energy costs jumped 400 per cent in three years, and chemical maker Coogee Chemicals had already closed down because of high gas prices.

“Many other manufacturers are close to making critical decisions on their operations unless wholesale gas prices soften, and once they decide to leave they don’t come back,” he said.

“These key decisions are coming and for some, they are just around the corner.”

Mr Sims said when the major liquefied natural gas projects in Queensland were being developed, suppliers assured industry and the government that there would be enough domestic supply, even with a focus on export.

Some of the comments I got was ‘we didn’t know the market was short?’, give me a break.

ACCC chairman Rod Sims

“I remember gas suppliers saying a reservation policy on the east coast was not required and that businesses would be protected,” he said.

“What we were told would not happen has happened.”

He said government intervention was necessary to stop more businesses failing.

“The gas industry complained about the government’s intervention … my strong view is that they brought it on themselves,” Mr Sims said.

Former federal resources minister Martin Ferguson said political intervention was one of the driving causes behind short gas supplies.Credit:Photo: Sean Davey

“I have absolutely no sympathy for them, they should have been paying much more attention to what was going on in the market. Some of the comments I got was ‘we didn’t know the market was short?’, give me a break.”

Former federal resources minister Martin Ferguson rejected Mr Sims’ comments, saying higher prices weren’t a result of companies chasing exports or bad behaviour.

They were due to the higher costs of developing coal seam gas and state governments banning the development of new projects, which reduced supplies, he said.

Victoria and NSW currently have bans on new onshore gas developments and fracking.

“We wouldn’t have this crisis today if it weren’t for politicians,” he told conference attendees.

“I have had a gutful of the failure of leadership, especially in NSW and Victoria.”

He added that these projects would not have been developed at all without the security of export customers.

“Prices has risen sharply due to higher-cost resources. Without exports, customers would have had to fund new sources of gas themselves.

“It is interventions [like NSW and Victoria’s ban on onshore gas] that are rising prices, not exports.”

Covering energy and policy at Fairfax Media.

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