Expert says no need to panic about gas price rise

CHANGES in Australia’s gas market are set to send prices skyrocketing, but the author of a Grattan Institute report says the Coast has no reason to panic.

COOKING WITH CASH: Peter Nipperess, of Hot Pipi’s at Mooloolaba, says the price of gas has risen every year for the past five years. Picture: Warren Lynam

LOOMING changes in Australia's gas market are set to send natural gas prices skyrocketing, but the author of a Grattan Institute report has a simple message for the Coast - do not panic.

The institute's energy program director Tony Wood, who wrote the report Gas at the crossroads: Australia's hard choice, said predicted increases of more than $300 a year on the average household gas bill for Melburnians was something we would never see on Coast.

Why? Because the report concentrates on Liquified Natural Gas, which is delivered by an integrated pipeline system which the Sunshine Coast is not part of.

Mr Wood's report found the gas price increases would put severe pressure on some manufacturing industries and was likely to price gas-fired power out of the electricity market, except to meet short-term peaks in demand.

The price boom is directly linked to the emergence of the Australian gas export industry, which is projected to be worth about $60 billion by 2018.

RELATED: Report: gas goes up for everyone, even Qld

"This will see domestic customers paying gas suppliers the same high price that suppliers can fetch on the global market," Mr Wood said.

"Without a serious (LNG) pipeline to the Sunshine Coast, the majority of households and commercial premises using gas will be on bottled LPG (Liquefied Petroleum Gas).

"These changes will make LPG an even cheaper and more attractive alternative now."

However, Hot Pipis restaurant owner Peter Nipperess was not convinced LPG prices will remain the more economical option in the long term.

"The cost of gas is right up there with rent as it is something that's on all day every day," he said. "I would be sceptical (of no price rise) as gas has gone up every year for the past five years.

"What we should be asking is why Australia's natural resources are being pulled out of the ground and shipped overseas while Australians would be paying overseas prices for them."

The report found that with a wholesale price increase of $5 a gigajoule, a big user of gas in Melbourne could expect to pay $435 more each year. By contrast, the same usage would cost $65 more in Brisbane.

For low users of gas, such as households connected to gas cooktops or using a small capacity gas hot water system, the effect of the price rise would be less than $50 a year.

Originally published as Expert says no need to panic about gas price rise