Productivity Commission to examine gas market’s effectiveness

The Productivity Commission has launched a research project on the efficiency of Australia’s gas market, with a report expected to be delivered in March 2015.

News Corp reports that selected policy issues will be examined, concerning the effect of linking to global markets, the effect of regulation on usage and investment, and a cost/benefit analysis of policies concerning exploration and production.

Some are predicting the price of gas will triple in the next few years as projects in Queensland – which will export most of their gas to Asia – begin to ramp up production.

The Productivity Commission recognises that major changes in the market for gas are underway as Australia becomes, for the first time, linked to international markets for LNG.

“The development of facilities on the east coast to produce liquefied natural gas (LNG) for export means that the eastern Australian gas market will soon follow the western and northern markets in being linked to global markets,” the Commission states.

The effect of the surge in exports has long been a concern for manufacturers.

In 2012 the Plastics And Chemicals Industry Association released a report, Large scale export of East Coast Australia natural gas: unintended consequences, in which National Institute of Economic and Industry Research findings modelled “for every dollar gained $21 is lost” through exports.

Earlier this year, lobby group Manufacturing Australia predicted that 100,000 direct jobs and $28 billion in GDP would be lost with the current policies as the situation develops.

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