Victoria stung with Australia’s biggest price hike

VICTORIANS have suffered the biggest hike in gas prices of anyone in Australia, despite the state having the cheapest wholesale gas price just two years ago.

VICTORIANS have suffered the biggest hike in gas prices of anyone in Australia.

Just two years ago, Victoria had the cheapest wholesale gas price. Now, it has the costliest.

Victorians, the nation’s biggest residential users of gas, endured a doubling of the wholesale price paid in 2015 before the cost dipped slightly towards the end of last year, a new report has revealed.

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The report comes just weeks after the consumer watchdog found that Victorian businesses were paying the nation’s highest gas costs and warned that the Andrews Government’s contentious decision to lock up gas resources was driving up prices.

The findings, commissioned by the federal government, has again called for more gas exploration to increase domestic supply, reduce costs, and potentially curb major gas price rises in future.

Two years ago, Victoria used to have Australia’s cheapest gas price.

Written by consultants Oakley Greenwood, it found that wholesale gas prices dropped in all states following federal intervention in the domestic market supply during the second half of last year.

The federal government will seize on the report to increase pressure on Victoria to abandon its temporary ban on onshore gas exploration.

Federal Energy Minister Josh Frydenberg told the Herald Sun: “We now have proof.

“Victorian families and businesses are now paying the highest prices in the country because of (Premier) Daniel Andrews’s mindless bans on conventional and unconventional gas, which is locking up 40 years’ worth of domestic gas supply.

“(It’s) a situation that will only get worse if Labor continues their job-destroying ­policies.”

The review found Victoria’s wholesale gas prices averaged $10 a gigajoule last year, almost double the price two years earlier when it had the lowest prices on the east coast.

It found retail gas prices had increased 26 per cent in real terms over a decade.

While residential gas bills remained among the nation’s lowest, wholesale costs now made up 43 per cent of the ­average bill.

Energy Minister Josh Frydenberg has slammed the state government for its fracking ban. Picture: AAP Image/Mal Fairclough

The Australian Competition and Consumer Commission warned in December that Victoria was not producing enough gas to meet its needs.

It found Victorian businesses were paying the highest costs, of as much as $9.93 per gigajoule, and that up to $4 per gigajoule was added to prices because gas had to be brought in from Queensland. Manufacturers have warned of job losses and a collapse in investment because of energy cost rises.

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Gas company Lakes Oil believes it can produce $700 million of gas a year from 2019 if the exploration ban is lifted.

Resources Minister Tim Pallas said this month that an analysis had found Victoria’s onshore conventional gas reserve was much smaller than its vast offshore resources.

“Victoria doesn’t have a shortage of gas,” he said then.

“The reason gas bills are up under (Prime Minister) Malcolm Turnbull is because his government keeps letting Australian gas be exported overseas, instead of putting our homes and businesses first.”

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