Looming gas shortfall to add to Victorians’ cost-of-living pain

Victoria’s gas crisis and a looming supply shortfall are set to stretch Victorian budgets even further, with claims manufacturers will “have no choice but to pass through cost increases”.

Victoria’s gas crisis and a looming supply shortfall is likely to add to the cost of food and other consumer goods, large energy users say.

Woodside Energy chief executive Meg O’Neill sparked a debate over the state’s energy future this week when she said it could be too late to avoid gas deficits in coming years.

Ms O’Neill told the Melbourne Mining Club that likely shortfalls this year but more ­serious “deficits” between ­demand and supply from 2027 would reduce the prosperity of the nation, which had been built on the back of cheap and reliable energy.

Energy Users’ Association of Australia chief executive Andrew Richards said shortages would mean higher prices and have an impact on the goods that manufacturers supplied.

“The immediate impact on everyone is that it exacerbates the cost-of-living crisis,” he said.

“(Manufacturers) have no choice but to pass through cost increases … it puts upward pressure on consumer prices, such as food, beverages, steel, concrete, glass, paper.”

Woodside Energy chief executive Meg O’Neill sparked a debate over the state’s energy future this week when she said it could be too late to avoid gas deficits in coming years.

Ms O’Neill said she believed there was more gas in Victoria to produce, but a ban on exploration and extraction between 2012 and 2021 and constant anti-gas rhetoric meant companies were likely to invest in other parts of the world.

Victorian Energy Minister Lily D’Ambrosio said gas was part of the government’s ­energy transition plan, but “supply is dwindling and prices are going up”.

While calling for more gas to be brought online by the industry, she took a veiled swipe at Woodside, one of the country’s biggest suppliers.

“While big energy companies are focused on lifting their prices and profits, we are ­focused on driving down Victorian families’ power bills,” she said.

Victorian Energy Minister Lily D’Ambrosio said gas was part of the government’s ­energy transition plan, but ‘supply is dwindling and prices are going up’. Picture: Valeriu Campan

Opposition energy spokesman David Davis said Labor’s ideology had disrupted a market crucial to the two million households and businesses connected to gas.

“This is a very important wake-up call for Victoria,” he said. “We shouldn’t have to face the surging prices and ­unreliable supply that will be Victorian Labor’s legacy.”

Ms O’Neill said in her speech on Thursday that a range of energy supply measures were going to be needed to transition to net zero, and that this could include renewables, gas and even nuclear power.

Woodside has traditionally supplied about two thirds of southern Australia’s gas, but offshore fields are depleting, and the Australian Energy Market Operator has warned of a big gas deficit from 2028, and shortages during extreme weather as early as this year.

Australian Pipelines and Gas Association chief executive Steve Davies said: “This is not just a looming energy crisis, it is an economic one.”

He added that Victoria risked losing industries and jobs that had “underpinned its prosperity for decades”.

Originally published as Looming gas shortfall to add to Victorians’ cost-of-living pain