ALP wants gas export cap as price soars

Anthony Albanese has urged Scott Morrison to ‘pull the trigger’ on capping gas exports as ­prices soar in east coast markets.

Labor leader Anthony Albanese. Picture: Jono Searle

Anthony Albanese has urged Scott Morrison to “pull the trigger” on capping gas exports as ­prices soar in east coast markets, declaring Australian jobs should be “put first” as the nation tries to pull through the pandemic.

In a move that will open up the political fight over gas prices, the Opposition Leader backed a call by the Australian Workers Union for the Prime Minister to invoke the Australian Domestic Gas ­Security Mechanism, which limits producers from exporting when there is a shortfall in local supply.

The AWU made the demand in The Australian on Friday, with the Australian Industry Group also sounding the alarm over price ­increases driven by demand in Asia and outages in coal-fired power stations.

“The union is quite right to call for Australian jobs being put first. We need domestic reservation to ensure that manufacturers are looked after,” Mr Albanese told The Weekend Australian.

“If it is not a trigger just for blanks then it needs to be used.”

The ADGSM was designed in 2016 when gas prices were rising and threatening local jobs, but it has never been used by the federal government.

Wholesale gas prices have more than doubled in the past month on the east coast, with spot prices in Victoria soaring to $58.44 a gigajoule on Friday morning, ­before dropping back sharply to $22 in the afternoon.

Wholesale spot prices in Victoria were $8.60 a month ago.

Australian Competition & Consumer Commission chair Rod Sims said he was concerned rising overseas demand for gas would hit Australian manufacturers that had signed long-term contracts.

Mr Sims called for more supply to be brought onto the market, ­declaring the price rises were a “rotten issue for manufacturers relying on gas”.

“Restricting exports is obviously a major step, and that is something for the government to comment on and not me,” Mr Sims said.

“Clearly more supply is what is needed in the market. We need more gas exploration and production. We need more pipeline capacity as well. If we don’t get that, we’ll end up importing it.

“I have noticed that Victoria has just allowed gas exploration again and that is good news. There is exploration going on in the Northern Territory.

“Whether you import it or whether you get it from the LNG players, you are going to have to pay international prices. The only way you can get below that is if you have a lot of gas, and that means more production.”

Mr Sims said the ACCC’s netback price – which is published to signal the maximum an LNG producer should sell to a local user on a contract – had increased from $9.30 a gigajoule in May to more than $11 in June.

“Our concern is what is happening internationally and what therefore drives the netback price, which is a fair bit of what drives what Australian manufacturers pay. And those are up at worrying levels over $11,” Mr Sims said.

“That is a trend you would not want to see continue.”

Mr Sims said he would name and shame producers that were charging local businesses above the netback price. “Local players shouldn’t be charging any more than netback. The spot price can go up to $20 or $40 or whatever it is doing,” he said.

“We shouldn’t be having contracts at any more than that netback price. And let’s hope that netback price comes down.”