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Gas price and supply issues impacting GDP, warns Chemistry Australia

Swift action is needed to increase affordable gas supplies and reform the market in line with the long-term interests of industrial gas users, according to Chemistry Australia.

The national body, which represents Australia’s chemistry industry, pointed to figures published late last year by the United States Studies Centre, which found that a permanent 25 per cent increase in the domestic price of gas will cause a permanent annual economic loss of $8.7 billion.

“This is not a one-off economic loss, it’s a recurring year-on-year hit to the nation’s GDP,” said Samantha Read, CEO of Chemistry Australia ahead of the Australian Domestic Gas Outlook in Sydney.

The ACCC has also warned high gas prices, supply constraints and lack of market transparency are forcing key businesses in the chemistry sector to consider closing or moving their operations offshore.

Manufacturers, particularly chemistry industry manufacturers, currently bear a substantial portion of the burden of costly, unreliable gas supply. More significantly, around one in every four Australian manufacturing workers work in heavily gas-reliant sectors and another 56 per cent work in related industries that do business with these manufacturers.

In 2017, commercial and industrial businesses accounted for 41 per cent of gas consumption in eastern Australia; at least 10 per cent more than either the electricity sector or residential and commercial customers.

It is clear that despite government intervention to increase gas supplies to domestic customers, Australia’s gas market is still not delivering outcomes that are in the long-term interests of consumers.

Representing member industrial gas users and their downstream customers at the conference, Chemistry Australia will reiterate the need for a comprehensive plan that deals with the growing body of evidence of structural failures, particularly within the East Coast Gas Market.

“The damage from high gas prices is being felt across supply chains and by households,” Read said.

“Australia has an opportunity to continue adding value to its abundant gas resources, generating greater wealth for the economy.

“To do this, action is urgently needed to develop a comprehensive national domestic gas strategy that prioritises reliable, affordable gas for consumers.”

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