Gas exports come at a cost

THE boom in natural gas exports from the east coast is driving up the price and limiting supply of domestic gas, risking harm to manufacturing, increasing household energy costs and posing ''a very significant negative impact'' on jobs and the economy, a new report says.

The report, which is released today and is set to reignite debate over coal seam gas, concludes that if the situation is allowed to continue, the net benefits to the economy from exports will be negated by harm to the domestic economy by 2020.

As well as damaging manufacturing and industry, which require a reliable, long-term supply of competitively priced gas, the constraints on domestic supply will also hit households.

The report estimates that between now and 2020, household gas, now priced at about $18 to $20 a gigajoule, will increase by up to $5, or about 25 per cent.

Industry pays about $6 a gigajoule at present, so a $5 increase would see its gas bill almost double.

Electricity prices will also increase. The report says the impact on gas-fired power stations would be three times the impact of the carbon tax.

''Wholesale electricity prices would thus rise and the viability of new gas-fired generation would suffer,'' it says.

The report was commissioned by the Australian Industry Group and the Plastics and Chemicals Association, and undertaken by the National Institute of Economic and Industry Research.

It finds that under existing plans, gas exports from eastern Australia will increase from 2 million tonnes in 2015 to 20 million tonnes in 2018 and possibly 24 million tonnes in 2023.

As exports increase, prices are being linked to east Asia's LNG market, the world's most expensive. Long-term supply contracts, crucial to domestic industry, have ''evaporated'' because of ''the rush to export this valuable resource''.

''Australia has only a few years before significant economic loss is likely to be felt from the failure to secure an affordable supply of natural gas to domestic users,'' the report says.

It says for every dollar gained in export output, $21 is being lost in domestic industrial output.

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