Earlier this month, the Federal Government agreed to investigate the gas market in order to bring down prices in return for gaining support for its tax cuts from other political groups.
But Jemena Managing Director Frank Tudor said an attempt to lower prices through government intervention was an ultimately short-term and short-sighted solution to current issues.
“As a result of misaligned policies across state boundaries – which have seen gas reserves locked up in some states – and energy policy uncertainty at the federal level, Australia’s east coast domestic gas prices have more than trebled,” he said.
“This makes east coast gas some of the most expensive in the world.
“Remedying this situation relies not on further reform but rather a fundamental shift in our country’s gas supply versus demand equation.
“Simply put, if Australian gas prices are to return to acceptable levels additional gas must be brought to market.”
Mr Tudor said both industry and consumers needed an environment that encouraged new investment in gas and facilitated the unlocking of new supplies.
“Freezing investment, by introducing further regulatory uncertainty, will only serve to increase the price of gas over the long term,” he said.
“As appealing as greater regulatory reform may appear, in the long term this will only serve to drive up gas prices.”
Mr Tudor’s view has been mirrored by other industry figures, including Australian Petroleum Production and Exploration Association (APPEA) Chief Executive Andrew McConville, who recently said that market intervention could “adversely affect confidence in the oil and gas sector”.
As yet, the government has not outlined what action it will take on gas, it has previously signalled the possibility of limiting LNG exports to divert supplies back to the domestic market.
For more information visit the Jemena website.
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