Speech: the need for a domestic gas reservation policy

28 February 2013

The Hon. JEREMY BUCKINGHAM [3.36 p.m.]: This afternoon I speak on the need for a domestic gas reservation policy. The Minister for Resources and Energy Minister, Chris Hartcher, is running a scare campaign in cahoots with the gas companies and their lobbyists at the Australian Petroleum Production and Exploration Association. They are telling the people of New South Wales that we are about to run out of gas.

Minister Hartcher told the Sunday Telegraph recently:

“If we are unable to access gas the lights will go out”.

Yet at the same time as we are apparently running out of gas the big multinational oil companies are spending tens of billions constructing export terminals at Gladstone in Queensland to export gas. What a contradiction. The truth is that there is plenty of conventional gas in Australia, not only in Western Australia but also gas connected to the east coast gas markets from the South Australian desert and from Bass Strait.

The chief executive of AGL, Michael Fraser, admitted as much in today’s Australian when he stated:

“If you look at New South Wales and Victoria, we would argue right now and for the next two to three years, those markets are well supplied with gas and there is no reason for prices to step up.”

Currently the main influence in the east coast gas market is the rush by a few multinational oil companies to export to markets in Asia. Gas companies are signing multibillion dollar export contracts. Gas companies can command prices up to 300 per cent higher in the greater Asia-Pacific region than they can in Australia. The liquid natural gas export terminals being built at Gladstone will act as giant vacuum cleaners sucking up all the gas they can find to sell at high prices. The effect on the domestic gas market will be a surge in the price of gas towards parity with the export price.

This means household consumers and industry in Australia will have their prices doubled or tripled. After all, why would a gas company sell to Australian companies for $3.50 or $4.00 a gigajoule when it could see the same gas go to South Korea, Japan or China for $9.00 a gigajoule? The cost will be borne by Australian households, Australian businesses and the Australian environment.

Last year the Australian Industry Group released a report entitled, Large scale export of East Coast Australia natural gas: Unintended consequences.  The report notes:

“… without a subsequent assurance of reliable, competitively priced supplies of gas for domestic industry 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 Australian Industry Group calculates that the overall loss to annual gross domestic product will be $22 billion more than it would be with secure and affordable gas. Rather than implement a sensible gas reservation policy to ensure supply for domestic markets, Minister Hartcher and the gas industry just want to let the coal seam gas industry loose all over New South Wales and Queensland.

But why should homeowners of western Sydney have their suburbs turned into a toxic gas field so that big oil can export gas to Asia?

Why should we drill toxic coal seam gas wells in the Sydney drinking water catchment so that big oil can export gas to Asia?

Why should the farmers and residents in Gloucester have their beautiful valley and aquifers pockmarked with gas wells so that big oil can export gas to Asia?

Why should we risk the highly productive black soil of the Liverpool Plains so that big oil can export gas to Asia?

And why should the farmers and communities of the Northern Rivers be industrialised so that big oil can export gas to Asia?

The gas beneath the ground belongs to all Australians. Why should we let a few very large companies flog it off overseas at the expense of Australian consumers, Australian jobs, and the Australian environment? What Australia needs is a nationwide domestic gas reservation policy. Under this policy gas companies would be required to keep a certain percentage of gas within Australia for domestic use.

The DomGas Alliance, an alliance of energy and manufacturing companies pushing for a domestic gas reservation policy, notes that of the top 20 countries with natural gas reserves only one country allows unrestricted gas exports. That country is Australia. Even that bastion of global capitalism, the United States, places restrictions on gas exports.

There is plenty of conventional gas in eastern Australia. The question is whether we are sensible and will reserve some Australian gas for use by Australian consumers. Australian governments should be working towards a domestic gas reservation policy now.

One comment

  • Great speech with GREAT questions. Australia IS indeed the only country in the world not to reserve gas for indigenous use. Why indeed? So multinational corporations can make a profit, whilst increasing domestic prices 300%, but only after introducing a toxic, (literally) industrialization on our land that cannot be rehabilitated. Go figure! How can we make these points common knowledge to the everyday busy punter – particularly those living in Western Sydney who look to be the arbitors of our next federal Govt.


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