Albanese Government doubles down on extending gas price cap amid supply shortage fears

The Albanese Government is standing firm on its policy to “shield” Australians from skyrocketing power prices, despite industry figures warning about its dire impact.

The Albanese Government has doubled down on extending the gas price cap it claims is “shielding” Australians from skyrocketing power prices, despite the industry questioning the impact it would have on “urgently needed” investment to avoid supply shortages.

But the gas industry has softened earlier claims that extending the cap would “freeze” investment and put thousands of Queensland jobs at risk.

It follows a report revealing that the energy and gas industries have the lowest business confidence of any sector, sparking accusations that government interventions in the industry were taking a toll.

Energy Minister Chris Bowen confirmed on Wednesday domestic gas prices will be capped at $12/GJ until at least July 2025, when it will be reviewed.

Climate Change and Energy Chris Bowen. Picture: NCA NewsWire / Martin Ollman

It is part of the final gas code of conduct, which will also allow gas companies to negotiate exemptions if they commit to increasing domestic supply.

Mr Bowen said capping coal and gas prices has “shielded Australians” from higher power bills and that the code struck the right balance between cost of supply.

“It means Australian gas … is available to Australians at a reasonable price,” he said.

“But also, we are making sure those gas shortages that (regulators) have warned … that we have dealt with that.”

The Australian Energy Regulator announced in May that southeast Queensland power bills would rise 21.5 per cent but noted it would have been higher without price caps.

Australian Petroleum Production and Exploration Association CEO Samantha McCulloch said the government had taken on some of the industry’s concerns, but that they still needed to see the final detail.

“The number one test will be whether the code delivers the confidence producers need to make the urgent investment in new gas supply necessary to avert future shortfalls and deliver the reliable and affordable energy needed by all Australians,” she said.

LNP MP and economics committee deputy chair Garth Hamilton. Picture: Kevin Farmer

Meanwhile, the Opposition seized on a Roy Morgan business confidence survey for April and May, which showed energy and gas confidence was the lowest of any industry in the country.

Economics committee deputy chair Garth Hamilton said it was a damning indictment and a result of “massive” government intervention in the energy sector.

“Lack of confidence will result in lack of confidence. The end game is higher energy prices for Australians,” he said.

Mr Bowen’s spokeswoman said Queensland power prices would have risen 43 per cent without price caps, while with government rebates some Queensland households could even see prices drop 10 per cent.

“Our relief plan included commitment to deliver the mandatory gas code which we announced today – ensuring certainty for Australian gas supply at reasonable prices for Australian users with producers already making indicative domestic supply commitments of at least 260 PJ to 2027,” she said.

Originally published as Albanese Government doubles down on extending gas price cap amid supply shortage fears