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Government 'can't guarantee' gas prices will fall with export restrictions Government 'can't guarantee' gas prices will fall with export restrictions
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The government “can’t guarantee” gas prices will fall as a result of its export restrictions, environment minister Josh Frydenberg has said, just one day after Malcolm Turnbull said wholesale prices should halve.The government “can’t guarantee” gas prices will fall as a result of its export restrictions, environment minister Josh Frydenberg has said, just one day after Malcolm Turnbull said wholesale prices should halve.
Frydenberg told ABC’s AM on Friday the government could guarantee only that the policy would put “downward pressure” on prices. In an interview on 3AW in Melbourne, Turnbull refused to promise an elderly caller that her gas bills would be cut, only that the policy would put “downward pressure on wholesale prices” which are a portion of her bill.
On Thursday the government announced it would create a power to impose a limit on gas exports, acting on advice from the Australian Energy Market Operator and the competition regulator that a shortage existed.On Thursday the government announced it would create a power to impose a limit on gas exports, acting on advice from the Australian Energy Market Operator and the competition regulator that a shortage existed.
The plan was praised by Australian industrial gas users but panned by gas producers who said it represented an “almost unprecedented” sovereign risk that threatened investment in gas production.The plan was praised by Australian industrial gas users but panned by gas producers who said it represented an “almost unprecedented” sovereign risk that threatened investment in gas production.
Speaking from the United States where he had met the US energy secretary, Rick Perry, Frydenberg defended the export restriction plan. Speaking from the United States where he had met the US energy secretary, Rick Perry, Frydenberg defended the export restriction plan in an interview on ABC’s AM.
He said that although he had previously labelled a gas reservation scheme an “investment killer”, the export restriction would allow Australia to meet predicted shortfalls without the “blunt mechanism” of reservation.He said that although he had previously labelled a gas reservation scheme an “investment killer”, the export restriction would allow Australia to meet predicted shortfalls without the “blunt mechanism” of reservation.
Frydenberg said the gas market was in crisis because companies were being offered gas at $20 a kilajoule, three or four times previous prices, putting 60,000 jobs at risk.Frydenberg said the gas market was in crisis because companies were being offered gas at $20 a kilajoule, three or four times previous prices, putting 60,000 jobs at risk.
The environment minister pointed the finger at “jobs-destroying gas bans and moratoria” imposed by state governments, echoing the Australian Petroleum Production and Exploration Association’s call for more gas development.The environment minister pointed the finger at “jobs-destroying gas bans and moratoria” imposed by state governments, echoing the Australian Petroleum Production and Exploration Association’s call for more gas development.
On Thursday Turnbull initially said gas prices “should be around half [$20 a gigajoule] or less” as a result of the new export restrictions.On Thursday Turnbull initially said gas prices “should be around half [$20 a gigajoule] or less” as a result of the new export restrictions.
At a later media conference, Turnbull clarified that if the wholesale price for gas in Australia was based on the export price “it would be less than half $20”.At a later media conference, Turnbull clarified that if the wholesale price for gas in Australia was based on the export price “it would be less than half $20”.
“This is not saying that all gas prices will be halved as a result of these changes,” he said. “Wholesale gas, for example, if you’re a household, a family, the wholesale price of gas is between 15 and 20% of the cost on your gas bill because the gas company has to get the gas to you.”“This is not saying that all gas prices will be halved as a result of these changes,” he said. “Wholesale gas, for example, if you’re a household, a family, the wholesale price of gas is between 15 and 20% of the cost on your gas bill because the gas company has to get the gas to you.”
Frydenberg noted Turnbull had “never said prices will halve for all gas users” and suggested that the export restriction would put “downward pressure” on wholesale gas prices, which can make up 20-25% of the retail price.Frydenberg noted Turnbull had “never said prices will halve for all gas users” and suggested that the export restriction would put “downward pressure” on wholesale gas prices, which can make up 20-25% of the retail price.
“Some businesses ... are being quoted $20 a gigajoule and that should come down dramatically. The price should be half of that over time.”“Some businesses ... are being quoted $20 a gigajoule and that should come down dramatically. The price should be half of that over time.”
Asked if he could guarantee price falls, Frydenberg said: “We can’t guarantee price in relation to any industry, what we can guarantee is that this mechanism will put more gas into the domestic market.”Asked if he could guarantee price falls, Frydenberg said: “We can’t guarantee price in relation to any industry, what we can guarantee is that this mechanism will put more gas into the domestic market.”
Asked if he stood by his claim of halving wholesale prices, Turnbull said Bill Shorten had misrepresented him and he had said only that “if the domestic market is adequately supplied, and that’s what the export measures ... are going to do, that’s their objective then the price should be around half [$20 a gigajoule] or less”.
“That is confirmed by industry experts ... Tony Wood from the Grattan Institute in Melbourne confirms that.”
He said $10 a gigajoule was the export price and Australian wholesale customers should not be paying a different price.
Asked about his meeting with Perry, Frydenberg said they had discussed reducing greenhouse gas emissions, the importance of renewables, including wind, getting community support for unconventional gas, and carbon capture and storage.Asked about his meeting with Perry, Frydenberg said they had discussed reducing greenhouse gas emissions, the importance of renewables, including wind, getting community support for unconventional gas, and carbon capture and storage.
On Friday Energy Networks Australia added to calls for a price on carbon in a report that found clear policy settings could save Australian energy customers $100bn, and allow a smooth transition to large-scale use of renewable energy and the prospect of Australia’s electricity sector achieving zero net carbon emissions by 2050.On Friday Energy Networks Australia added to calls for a price on carbon in a report that found clear policy settings could save Australian energy customers $100bn, and allow a smooth transition to large-scale use of renewable energy and the prospect of Australia’s electricity sector achieving zero net carbon emissions by 2050.
Asked about the report, Frydenberg said the government “had made it very clear we won’t be taking up an emissions intensity scheme” and believed it could meet 2020 and 2030 greenhouse gas reduction targets with its current policies.Asked about the report, Frydenberg said the government “had made it very clear we won’t be taking up an emissions intensity scheme” and believed it could meet 2020 and 2030 greenhouse gas reduction targets with its current policies.
“One of the problems with an EIS ... is that it is based on very cheap gas, which we know is not available at the moment. It’s also prefaced on the ... forced closure of more than half a dozen coal-fired power stations.“One of the problems with an EIS ... is that it is based on very cheap gas, which we know is not available at the moment. It’s also prefaced on the ... forced closure of more than half a dozen coal-fired power stations.
“Coal, while it is a declining percentage of the overall energy mix, does remain a very important source of baseload power, providing the stability the system needs.”“Coal, while it is a declining percentage of the overall energy mix, does remain a very important source of baseload power, providing the stability the system needs.”