Triggered by the Covid-19 pandemic, gas prices fell significantly.
While lower prices are providing some relief to manufacturers and other gas users on Australia’s east coast, prices were still higher than export parity, proves ACCC’s latest gas report.
Additionally, the report highlights that these lower prices may not last, and the risk of a supply shortfall remains.
A shortfall of as much as 30 PJ may arise by 2024 in the southern states, while the broader east coast gas market faces the risk of a shortfall in 2026.
“The fall in gas prices is very welcome news for major gas users who, like many other Australian businesses, have faced enormous challenges in responding to the Covid-19 pandemic,” ACCC Chair, Rod Sims says.
“It is concerning that the risk of a gas supply shortfall in Australia’s southern states continues, despite this having been a looming issue for some time.
“There are new sources of supply and related infrastructure that could be brought online to avoid a potential shortfall. It is crucial that investment decisions are made now to ensure there’s enough supply, and to provide downward pressure on future price rises.”
The fall in gas prices has been in part driven by record low oil and LNG spot prices exacerbated by the COVID-19 pandemic.
The ACCC observed that price offers for supply in 2021 fell from $8-14/GJ during the second half of 2019 to $6-8/GJ by mid-2020.
The report also provides, for the first time, analysis of suppliers’ pricing strategies, obtained under the ACCC’s compulsory information gathering powers.
“Our preliminary analysis suggests that competition between suppliers has been a limited constraint on gas prices over the past few years,” Mr Sims says.
“We recommend governments facilitate greater competition between suppliers, such as through active tenement management, to encourage producers to bring gas to market.”
Read the latest gas report here.